My primary business is an LLC and I just opened a second one for another venture I'm beginning work on. For me, the liability protection is worth the extra hassle, which really isn't that great anyway if you're not doing your own taxes (I'm very glad I have a tax accountant in the family!).

Things are a bit different if you're in California, which imposes a minimum $800/year tax on LLCs. Ouch!

I'll throw my 2 cents in here. My current venture is the first I've really tried. Because of that, I'm not starting an LLC right away. I didn't want to spend the money on that until I know whether or not it will be a success!

Perhaps that's not the best way to go, but it seems logical to me. I can always start an LLC after the fact.

I'll start with "I'm not a lawyer and don't take my advice as anything more than free advice. Worth every penny."

I currently run my business as an LLC, largely because I have a partner. The LLC tax structure was advantageous for us, but there are plenty of reasons to choose an LLC.

For most people, there's really no reason to start a corporation. The LLC only provides liability protection against litigation, not from financial obligations. Well, that's not exactly true. Technically, if you borrow money as an LLC, you're not liable for repayment if the LLC goes bankrupt. However, most lenders today require a personal guarantee before they'll issue a loan. So, there's no advantage there. The LLC is a pass-through entity, so any gain or loss is passed onto my personal taxes, so I don't have a tax advantage over a sole proprietorship.

The only exception I can think of is if you plan to run a news site. If you do that, you'll probably want to have Libel insurance, so it's a good idea to insure the corporation for the liability reasons mentioned above.

The SBA has a great walkthrough on selecting a business structure.

--Eric H. Doss

All of my business ventures have all been LLCs. Generally this has been the most reasonable thing for me to do from a tax perspective, as well as protecting myself personally. If you are a sole-proprietor or a partnership you and your personal assets can be liable. However, if you are an LLC, only the business is held responsible and no one can go after you personally if there are legal issues.

This was talked about on the Location Rebel forum in some detail. Here is a link: http://locationrebel.com/comments.php?DiscussionID=4&page=1#Item_0

Towards the bottom of the thread someone makes a really good case for LLCs

I stressed out about finding the right answer to this question for quite a while. There are tons of implications with each of the options. The main thing I wish I'd fully understood up front is that it's easy to change the structure later.

If you're starting a business, don't think twice about whether or not the entity you choose can stand the test of time. You'll have time to sort it out between Day 1 and whenever you're raking in the big bucks.

That said, if you want to skip wasting the time required to learning the best answer... Start an LLC (sole proprietorships are free, but messy) today and let a lawyer sort it out after your business is progresses.

If you honestly think you'll be soliciting VC or going public in the near term, Wilson, Sonsini, Goodrich & Rosati will be happy to absorb your cash.