Why LLC?

[siraskalot]

As I understand it, the reason you form an LLC is so the business owner can separate and protect their personal assets from the debts and obligations of their business.

I really dont think I should have any "debts or obligations". I am figuring the startup costs to be about $1000 and the monthly expense of running the web store to be about $100/mo. If, after say 10 months, things arent looking profitable, I would likely just bag it and consider it a $2,000 lesson learned.

Is there really any reason for me to consider forming an LLC at this point? Or am I missing some other reasons/advantages that I should be considering?

[jazzdrive3]

Liability protection. If someone sues you, they can't come after your personal assets, only the assets of the LLC. Not so with a sole-proprietorship, where business and personal assets are one and the same.

[final_id]

Are there any advantages to remaining in the "sole proprietorship" status?

And, can you incorporate just ONCE, and then put all your different (potentially failing) Muse projects under that one umbrella? Like, I could establish the "final id corporation 929534632" and then try to sell shoes on the internet. If I failed, then I could use the same corporation to try to sell socks on the internet. If I failed again, then I could ... or would I have to re-incorporate every time?

[Drewkerr]

LLC is not a corporation. Limited Liability Company.

Corporation is a lot more work, and can cost more.

LLC is just the name of the business. You can have several different muses under one LLC (or one umbrella). What a lot of people do is setup sort of a general name for the LLC, like DK Ventures LLC. Then use a DBA (doing Business As) for the online Entity such as Hand Bags.com but the legal name would be DK Ventures, LLC.

Hope this helps!

Drew

[final_id]

Thanks Drew. What are the advantages, disadvantages, pitfalls to doing that LLC + DBA system? How does one go about it?

[Drewkerr]

LLC is very simple to setup. Just look up your states - Secertary of State website and that will have all the information. There is really no formal process for making a DBA.

[zoot]

In many states and counties there is a formal process for creating a DBA which involves filling out a form and paying a $10-$50 fee.

http://entrepreneurs.about.com/od/businessstructure/a/doingbusinessas.htm

[TimW]

Some states have annual reporting requirements for LLCs, so make sure you understand any of those obligations.

One LLC, many DBAs.

Personally, I've separated LLCs because of the potential liability of my main business. If that gets sued, etc., the other LLC is separated from it.