LLC or LLP ..?

[DHK]

Freakin solo 401k is the most incredible vehicle on the planet . I put $73k in that in 2024 About 2 times what you can put in a Roth

Try a 412e3 or cash balance pension plan sometime. And yes, sole proprietors can do them.

To the OP: Since there is

• no liability protection on your own actions (that's why we're licensed)
• and you're married to whom would be your LLP partner (as Tahoe Ray already pointed out),

Unless you plan on recruiting other agents, or plan on hiring staff... those are the only two areas where you can have some liability protection.

Unless there's a tax advantage of some kind, there's no reason to form any kind of business entity at this time, particularly with that business ownership information report that (was) required and many states have filing fees for business entities. California is $800 for an LLC.

https://www.ftb.ca.gov/file/busines...text=This yearly tax will be due, even if you

No idea what it is in Ohio, if there is one.

 

[sman]

Try a 412e3 or cash balance pension plan sometime. And yes, sole proprietors can do them.

To the OP: Since there is

• no liability protection on your own actions (that's why we're licensed)
• and you're married to whom would be your LLP partner (as Tahoe Ray already pointed out),

Unless you plan on recruiting other agents, or plan on hiring staff... those are the only two areas where you can have some liability protection.

Unless there's a tax advantage of some kind, there's no reason to form any kind of business entity at this time, particularly with that business ownership information report that (was) required and many states have filing fees for business entities. California is $800 for an LLC.

https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#:~:text=This yearly tax will be due, even if you

No idea what it is in Ohio, if there is one.

So you're saying no need to even form an LLC that can be treated as an S-Corp? I'm not a CPA, but the fact that I can pay myself 6 figures in distributions and avoid paying FICA on that money (up to the limit) is quite the tax savings. Yes, there are additional expenses to doing it this way, but the tax savings seem to far outweigh those additional expenses. My annual filing fee for the state of Georgia is $50. The larger expense is paying my CPA to do my quarterly reporting and an additional tax return. But again, it saves me money. I'm open to hearing a better way though.

 

[DHK]

So you're saying no need to even form an LLC that can be treated as an S-Corp? I'm not a CPA, but the fact that I can pay myself 6 figures in distributions and avoid paying FICA on that money (up to the limit) is quite the tax savings. Yes, there are additional expenses to doing it this way, but the tax savings seem to far outweigh those additional expenses. My annual filing fee for the state of Georgia is $50. The larger expense is paying my CPA to do my quarterly reporting and an additional tax return. But again, it saves me money. I'm open to hearing a better way though.

Unless there's a tax advantage of some kind, there's no reason to form any kind of business entity at this time

 

[sman]

Well, he stated he's already an LLC so that's been done. It just seemed to me (maybe a poor assumption) that you were implying even doing an LLC wasn't worth it.

 

[marindependent]

no liability protection on your own actions (that's why we're licensed)

I 99% agree, but not 100%.

It just seemed to me (maybe a poor assumption) that you were implying even doing an LLC wasn't worth it.

I think it is still can be worth it, at some point.

Not all actions are "malpractice", so to speak. You still have liability associated with the office, advertising, employment, pollution, etc. It is not at all clear to me that the lack of a liability shield for agencies applies or does not apply to such things. [I am not an attorney.] Plus a lot of agencies buy their office buildings.

Its the same thinking of why agencies need not just a PL policy but a GL policy, and even a Cyber policy.

Additionally - Once your Agency is Large Enough - Incorporating is a real sign of credibility for a small percentage of clients. There 'may' also be a value to it if you wish to sell the business at some point.

For the tax related items - I would lean on your CPA to get a detailed answer.

 

[DHK]

Not all actions are "malpractice", so to speak. You still have liability associated with the office, advertising, employment, pollution, etc. It is not at all clear to me that the lack of a liability shield for agencies applies or does not apply to such things. [I am not an attorney.] Plus a lot of agencies buy their office buildings.

To the OP: Since there is

• no liability protection on your own actions (that's why we're licensed)
• and you're married to whom would be your LLP partner (as Tahoe Ray already pointed out),

Unless you plan on recruiting other agents, or plan on hiring staff... those are the only two areas where you can have some liability protection.

That covers your employment part (especially chargebacks from contracted agents).

Misrepresentation in one's marketing will be included in a complaint.

Office... agreed.

Pollution... really? Okay.

When you're talking about the liability for business property, I agree for possible accidents, regulatory issues, etc.

 

[scagnt83]

Well, he stated he's already an LLC so that's been done. It just seemed to me (maybe a poor assumption) that you were implying even doing an LLC wasn't worth it.

He is saying that most agents would not benefit from the liability protection due to the nature of how we operate. And the main reason to incorporate, is for tax benefits.

 

[sman]

He is saying that most agents would not benefit from the liability protection due to the nature of how we operate. And the main reason to incorporate, is for tax benefits.

Yeah I got it. Took me a minute. I just pointed out what I felt was being implied. You know, some of us can be honest even when we misinterpret things.

 

[DonP]

There's much dispute how much a llc protects you from lawsuits . That's why we have e@0 ins . I have a friend who's vice president at a big bank . The bank laid off many people including a pregnant woman who worked under him . She sued citing discrimination. The lawyer sued the bank and 3 employees personally . So it's very easy to sue the business and individual in insurance.

 

[DHK]

There's much dispute how much a llc protects you from lawsuits . That's why we have e@0 ins . I have a friend who's vice president at a big bank . The bank laid off many people including a pregnant woman who worked under him . She sued citing discrimination. The lawyer sued the bank and 3 employees personally . So it's very easy to sue the business and individual in insurance.

E&O won't protect you from employment lawsuits. E&O also won't protect you from accusations of fraud (criminal activity).

For that example, that was an employment dispute which, yes, can easily be done personally and the business entity.

It will be up to the COURT to enforce how a punitive judgment is enforced and collected, not how the lawsuit is charged. The court should limit the liability to the entity... unless there's other accusations like sexual harassment, etc. (Not legal advice)