How To Set Up Your Design Business: LLC vs. Sole Proprietorship
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- Опубликовано: 12 авг 2018
- LLC vs. Sole Proprietorship: Set Up Your Design Business The Right Way. Rebecca Heinemann needs to raise her business IQ. In this coaching session, Chris walks her through the Pros/Cons of setting up as a sole proprietorship, limited liability company, and corporation.
1:00 Set up an LLC-Limited Liability Corporation to protect yourself lawsuits and gives you greater flexibility when it comes to taxes.
1:34 Discussion about limited liability corporations
2:26 Common types of business entities: sole proprietorship, llc and corporation. Questions to ask yourself.
3:40 Benefits of sole proprietorship: uncomplicated, simple tax benefits, low processing fee
3:55 Cons of sol proprietorship: personally liable, high audit rates, can't raise capital, no separation
4:42 Pros/Cons of LLC
5:50 Definition of Corporation
7:00 Call your accountant or CPA for professional advice on liability and tax planning.
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Suggested reading list:
"101 Things I Learned in Business School"
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"Creative Strategy and the Business of Design" (by Douglas Davis)
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"Burn Your Portfolio" by Michael Janda
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Craftwell by Rebecca Heinemann
www.craftwellstudio.com
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Chris Do I finally did my P+L sheet to calculate Gross Income vs Net Income and so far we are forecasting that CraftWell will almost double what we did last year. I'm amazed! Working on the LLC.
wow. Congrats!!!
I cant believe how quickly and simply this was articulated. Ive been wading through the internet to figure out the pros and cons, hours flipping through tabs only to be more confused than I was before.
This is the power of design. Thank you.
credit goes to Melissa Katherine.
Thank you for this, Chris and The Futur team. This was informative and succinct.
This is the clearest and most informative answer I've ever heard
Glad to hear
I always love listening to Rebecca’s honesty and willingness to learn. I wholeheartedly agree with what Chris is saying in the video. You have to shift to an LLC, so your business is a separate legal entity, and your personal assets are no longer at risk. Only use a sole proprietorship to test and see if there is a viable market for you to pursue. Rebecca has more than proven the legitimacy of her business, so it’s time to protect the company. Great job breaking things down Chris.
*I'm not a lawyer and I'm not giving tax advice, seek a professional for your specific situation*
I’ve seen the 5 most common business structures in the US are:
Sole Proprietorships
A sole proprietor is someone who owns an unincorporated business by himself or herself.
Partnerships
I like to think of this as a plural version of a sole proprietorship. A partnership is a relationship existing between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the company.
Corporations
In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income.
S Corporations
Very similar to a corporation with one of the main differences being that the income, losses, deductions, and credits are passed on to the shareholders.
Limited Liability Company (LLC)
Filing as an LLC allows your business to be viewed as a different legal identity and in my opinion the most flexible type of business structure because you can “elect” for your business to be treated as a sole proprietorship, partnership, corporation or s-corporation.
A good breakdown of this is on the IRS website:
www.irs.gov/businesses/small-businesses-self-employed/business-structures
i don't even play one on TV.
Rebecca is always bright, but in this video Rebecca literally just said: "hmm...hmm" "yes, NY" "ok" "because like, if one of the designers comes into the office and trips and brakes her ankle" "alright" :)
Hey Osvalo B, good to meet you.
I am a regular viewer of the channel and Rebecca has 9 videos on the channel: ruclips.net/video/D6bp5DGbSH4/видео.html. When I said "I always love listening to Rebecca’s honesty and willingness to learn." I was speaking about all of her content on the channel.For this video specifically I appreciate that Rebecca would allow Chris to show the content of their meeting.
As a business owner it may come off as embarrassing to let others know you weren't aware of business structures but the fact that Rebecca allowed for others to hear the conversation because it would help other creatives is something I appreciate.
Also I can tell this was a part of a larger conversation and they chose to focus on this subject specifically. I'm sure Rebecca had more to say.
This was great to know and right on time. Lately, I've been thinking about whether this go around (been a self-employed designer before) I should LLC or keep with the sole proprietorship. Since, at this point, I can safely say I will not be at the point of making $80K this year, I'll stay sole proprietor for now. Maybe next year because things are looking up. Probably should look into liability insurance though. I know from experience it's not safe out here in these "self-employed designer" streets. Thanks!
I like the 1920’s paper boy look.
Chris, you need to stop reading my mind! You're releasing these videos as I think of stuff I want to know!
stop thinking those thoughts then i will stop reading your mind. ;)
The Futur but then I'll miss your videos :)
LLC IS THE WAY TO GO! Corporation seems like alot of work unless you're a huge company.
It's good to know that 80k in revenue is the mark from freelancer/sole proprietor to LLC. That pretty much is enough for a salary for a full time one man show. Thanks!!
Revenue != profit or take home pay
you are awesome master Chris do!! Thank you so much!!
Thank you. Jaime.
Yes, very important stuff to know. In Canada, it's not exactly named the same but the end goal is similar. Great advice
you can adapt to local laws.
Indeed :) thanks for taking the time to explain the pros and cons of this :)
@@haken29a It called Limited Liability Partnership (LLP), right?
This was really short ... I want to know how is her business doing and what did she do to get more clients. But I Loved the content, thank you @thefutur
Thank you so much!
Thank youuuu. This is something they didn’t cover for me when I went to school for design and I was literally just thinking about this today.
then we answered it! yay.
Great discus.
Thank you.
Business risks are covered by paying the Fed/State (which separates your Biz from Personal Assets) or to Insurance Companies which they can cover any potential risk too! .. the pros & cons are not easy to find out except if money get substantial high so other factors kicks in like:
1) spending more for personal reason through LLC so that is less controversial and fought by the IRS
2) (maybe -not sure) opening a 401K that can go super high ($50,000!!!) in tax deductions
3) covering risks on hired workers
But mostly I would like to know from TRANDY SunRising Hot Boy what are from his point of view on about TAX BENEFITs listed but not exploited !
I never explored also when LLC are Incorporated ! is it when Owners wants to expand to other entities but need more separation of legal protections?
INTERESTING bravo! (because you are a man, but when you say it to the lady is BRAVA!!)
marino maronati
#1 italian telecom consultant in USA (yeahhh baby!)
You need to "center align" your tie. It's making my brain itch
I know. Wished Rebecca told me.
Andy ! he does not wanna tell you you are old ! so, I do it ! .. it is a Hip Attitude no? is he dressed like a school girl? no! He is like a trendy ! so that goes in that direction .. expand your senses!! go to italy for that! ahahahah Sorry man!
I just finished the whole process of setting up my LLC! Waiting for my welcome package from Legalzoom. Question : should I update my online presence to the " Company , LLC" extension? Is it required to do so?
it's not required.
Hey Chris! I'm always delighted to see your videos for the sole purpose of lucid explainations of complicated concepts, gain insights, and I get to gather so much info that I try and aggregate that on my own and extrapolate those concepts & implement them practically in my projects and in real life, and most often I am amazed by the results I yield.. I love your #StyleQuotient and tend to follow you or replicate you.. ;) I'm sorry I couldn't tune in to today's(i.e 17th Aug '18) screencast, but I'll make sure to download it if possible, and watch it in accordance to my schedule. I am ever excited to meet in person and convey my gratefulness to you! It gives me an enormous pleasure whenever I receive your reply, it encourages me further, thank you! Often I'm intrigued by your work/show, so I pay attention to that and I rarely see the show notes, that's how I missed your podcast handle and other related stuff, so I had to ask you in the last video (bit.ly/2OKuvIe)..! Thanks for everything and waiting abruptly for your next vlog/video, take care.. cheers!!
take care Zoobie! where do you live? i'll come to your town one day and you can share what you learned with me.
I live in India, and I am so excited to get a chance to meet with you and share all the stuff I've been working on. I am a Full stack developer by profession and I love art, I'm a fine artist(Painting landscape, sceneries etc..) so I try and incorporate all my artistic skills digitally and come up with compelling user interfaces for my applications, and I'm really in love with what I do.. because it gives me the freedom to think beyond any boundaries. Seeing you and the work you do provides me with certain new dimentsions, that I feel really professional about and hence my interest grows exponentially. Thanks!
Hey chris... what do you think for a start up is he proper route ? im saying corporation because of "investors" however do we really need investors for a start up to be succesful ? maybe you can do a video series on start ups talking about design and strategy ?
Not Chris, but you don't need investors in order for a startup to be successful. You have to remember that a lot of investors want you to create a huge return on their investment. They will not hesitate to replace the founder of the company if they don't like where it's heading. Overall, any real business should be set up as a corporation because it creates a buffer between you and the clients.
i think you should talk to an attorney. money well spent.
This video really helped me understand what I need to do. Thank you 🙏🏽
I stumbled onto “NORTH WEST REGISTERED AGENT” everything sounds nice and affordable compared to other LLC host companies. Any one have experience with that organization? it is a good turn out?
My gut is telling me to go with them
good
Someone is dressed for the topic. haha!
Are agencies typically set up as LLC's? Or is it a toss up between LLC's and Corps?
i think the bigger the agency the more likely they are an S or C Corp.
if I am one person LLC would it benefit me to setup a payroll system to pay myself and have it take federal taxes out?
I would ask my accountant if I were you.
Did you find out?
While interviewing, a person on the right sound comes out of my left headphone and left person sound goes from the right. Some spatial sound business is going on here.
sorry. we thought we fixed it.
This kind of channel is what people need more to stay without being feeling wasted. Even the comment section sparks you critical vibes without being judgemental. Really appreaciate this whole conversations between the content-audience and also the feedbacks.
Design+Bussines+Law... then what else I could learn???
marketing, communication, it's a lifetime of learning.
This is an honest question...if it's your duty to pay as little taxes as possible for your company, doesn't that mean the U.S. President did nothing wrong in that area?
I guess there's one thing that is positive in Florida. Corp taxes are lower than California.
some states have no income tax. look into those.
The Futur interesting. I didn't know that. Thanks for the tip.
Oops! At 5:17 Spell-Check! Double-Proof! Maintanence is actually Maintenance! Otherwise very informative. Thanks!
Darn! We missed that one.
Business IQ: +26 points
nice.