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Old 20th July 2008, 12:09 AM   #1
anthonydavis
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Default Sole Proprietorship Or LLC?

I have a friend who is planning to start a massage business. She is a licensed therapist. She already rented a place and will be hiring 2 independent massage therapists and she herself will perfom massages to clients.

Now shes, thinking if she would consider sole proprietorship or a corp like LLC?

If one of the contractors did something illegal(like sexual massage, etc,) would she be responsible for it

If the contractor hurt a client during massage, would she be responsible for it? Should that be covered by insurance or the contractor buy their own insurance.

Any help on this please...

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Old 20th July 2008, 09:35 AM   #2
DeenaEsq
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I think I saw this question on another site, but you seem to be a different OP, so I'll post the answer I gave here:

First, a corporation and an LLC are two different business forms. I would almost always suggest using an S-Corporation or an LLC for a small business starting up to give the new business a liability shield. I suggest an LLC. She needs to make sure that it's set up properly and that all company formalities are followed correctly to maintain the liability shield.

If the contractors have specific independent contractor agreements with her and they are treated like contractors, rather than employees, then she would be shielded from liability. Each independent contractor massage therapist should maintain their own insurance. Your friend should have insurance for herself as a therapist and insurance for her business (in case someone slips and falls on the way in or there's a fire and she loses all of her equipment, etc.).

It's probably also worth a mention that she needs to check the laws in her own state and locally to see if the business needs to be licensed or permitted.

Hope that helps. Let me know if you have other questions.

Deena Burgess, Esq.

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Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post. No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation. Any advice given here is not intended to create an attorney-client relationship in any way.

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Old 21st July 2008, 10:43 AM   #3
Tom Young
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You may find a visit to http://www.score.org/index.html where you can get FREE & CONFIDENTIAL business advice helpful.

I have operated my business as a sole proprietorship since 1975 finding no reason to incorporate.

Your situation is different and you may find incorporating a good move as a means of protecting your personal assets in the event of legal issues down the road.

Tom

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Old 18th February 2010, 07:58 PM   #4
BeTheBest
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With all the respect of the people posting here, they still don't understand the entire situation and I would not suggest you post those details online.

For that reason and because it could prove to be an important matter, she should spend the money to consult with a good lawyer in that field. I would even think that most offer some advise to start without charge.

Why are you gambling if it is that important. Ever hear about the penny saved??

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Old 23rd February 2010, 12:24 AM   #5
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Quote:
Originally Posted by BeTheBest View Post
With all the respect of the people posting here, they still don't understand the entire situation and I would not suggest you post those details online.

For that reason and because it could prove to be an important matter, she should spend the money to consult with a good lawyer in that field. I would even think that most offer some advise to start without charge.

Why are you gambling if it is that important. Ever hear about the penny saved??
I do agree. With this situation I think it would be best to ask the help of a specialist or a professional maybe a lawyer.

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Old 25th February 2010, 01:53 PM   #6
EPi
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Protect personal assets?
When I 1st formed my entity, I got a new car to help the credit score, a personal guarantee was required. Setting up vendor accounts each wanting a personal guaranty aswell. Who's liable?
The bottom line, you can be held reliable, corp or not, by removing the corporate veil. One way that can be done is simply by not having your minutes up to date.

I am a S corp, I choose this because I plan to grow a "bigger" smal business and didn't want to reorganize later.

This is question that is to each their own. What might be good for you might not be good for me. You will have to examine your all your liabilities. Maybe just a having a hefty Insurance police will do for you. It would be wise to pay a few buck for a sit down with a experienced licensed enrolled accountant agent. then sit down with a lawyer experienced in corporate law. Between them both you will gain enough info to exacute a plan of action.

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Old 25th April 2010, 04:42 PM   #7
rr1455
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Default LLC or S corp

Some great posts..... You need to make sure to protect yourself....
Either LLC or S Corp will do that.... I think it has been covered above rather well.... Yes, you might have to sign personal guarentees, but only sometime... Try not to....

Best to you with the new business... You are asking the correct questions.

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Old 25th April 2010, 07:22 PM   #8
cfoservices
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I don't know if this is pertinent to this discussion but it is my understanding that you can be an LLC for liability protection purposes and be taxed like a sole proprietorship through a special election.

Check with your accountant.

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Old 26th April 2010, 12:59 PM   #9
sequoia payroll
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Quote:
Originally Posted by cfoservices View Post
I don't know if this is pertinent to this discussion but it is my understanding that you can be an LLC for liability protection purposes and be taxed like a sole proprietorship through a special election.

Check with your accountant.
Yep. You can elect to be taxed as a sole proprietor, or an incorporation. I would suggest an LLC, simply because it gives you the tax benefits, and protection in case of legal issues, and it is less structured than a S corp or C corp. A good article on this is found here
http://www.inc.com/magazine/20070701...f-company.html

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Old 16th January 2014, 01:04 AM   #10
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Thanks for the link to the Inc Magazine article, Sequoia. Do you know if much has changed on this front in recent years? The article was written in 2007.

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