# Finding the right business structure for a single owner with a startup clothing line.



## Jceph (May 12, 2014)

Hello Everyone,

First and foremost I definitely want to thank everyone here for comments and post, it has been a big help in achieving a startup clothing brand.

The question I have are for those who have experience in forming a business structure that is for a single owner.

*What is your business structure?*

*What was it being taxed as?*

-sole proprietorship(default)

-Limited Liability Company LLC (single member)

- An S corp or C corp.


If YOU have formed your structure a different way and taxed a different way and it has worked for you, that is also valued information.

I understand that it is different in all the states and I should look to an attorney or small business development center, etc.

I wanted to know everyones perspective, and examples if you are willing to share about your experience.

Which one helps?

Thank You.


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## Stefano (Aug 5, 2013)

Jceph said:


> Hello Everyone,
> 
> First and foremost I definitely want to thank everyone here for comments and post, it has been a big help in achieving a startup clothing brand.
> 
> ...


Hello,
For federal tax purposes, a sole proprietorship is taxed in the same way as a single member LLC - Schedule C with your 1040 return. The big advantage of the LLC is that it protects your personal assets (like your house) if you are sued. It also presents you as more of a legitimate business.

LLC rules and state tax rates vary from state to state. In my state it's cheap ($100) and easy to set up an LLC by yourself - no lawyers required. Go to your Dept of State web site to see what their requirements are. Some of the best states to set up an LLC in are Wyoming, Nevada, New Hampshire, and South Dakota. You can set up an LLC in those states regardless of where you live, but you still have to pay a business profits tax in the state in which you reside, and pay other fees like a P.O. box and Registered Agent fee.

Type S and C corporations have different write offs, tax rates and distributions - well beyond my humble business model. You will probably want a Lawyer or Account to set one of those up.

Good Luck!
- Steve


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## Jceph (May 12, 2014)

Thanks Steve for your advice, also did you open your business by yourself and chose an LLC as a single member and was taxed as a sole proprietorship?


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## binki (Jul 16, 2006)

Simply put a c corp offers unlimited cash and no cash tax free benefits. No other org offers that. Ignore double taxation. Unless you have dividends and taxable income it won't happen. 

Don't trust me though even though I have had a DBA and an LLC before my corp. Check with your accountant.


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## jeron (Jul 16, 2012)

What do you mean by unlimited cash? 

Thanks,
Jeron


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## Stefano (Aug 5, 2013)

Jceph said:


> Thanks Steve for your advice, also did you open your business by yourself and chose an LLC as a single member and was taxed as a sole proprietorship?


Hi,
I registered a trade name ($50) and ran my first business as a sole proprietorship for many years. For my federal tax return I just added a Schedule C to my Form 1040 and plugged my business income and expenses in the proper places. 

After reading about personal liability issues, I set my next two businesses up as single member LLC's. I pay federal taxes on them the same way as I did for the sole proprietorship. I have found no tax advantage to one entity over the other, but a big liability advantage. For either type of business, you pay taxes the same as you do on personal income, except you get to take deductions. 

I suggest you go with an LLC. If you hit the big time, bring in the lawyers and change your business over to a Delaware based Type S corporation.


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## Mtnview (Nov 5, 2009)

Odd. I am subscribed to this thread even though it would appear I never posted a response prior to this one. Wonder if TSF has a glitch.


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