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Looking to convert my business from a sole proprietor to an…

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Looking to convert my business...
Looking to convert my business from a sole proprietor to an LLC. I currently own a gift shop and as we continue to grow should I be looking at making the change over?
Submitted: 12 months ago.Category: Business Law
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Answered in 18 minutes by:
6/24/2017
Business Lawyer: Infolawyer, Attorney replied 12 months ago
Infolawyer
Infolawyer, Attorney
Category: Business Law
Satisfied Customers: 62,190
Experience: Experienced lawyer
Verified
Will you have partners or investors?
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Customer reply replied 12 months ago
No, sir. The gift shop has been opened since 2015.
Business Lawyer: Infolawyer, Attorney replied 12 months ago
I would not make the change as long as have corporate form. The LLC can be expensive due to publication and tax filings. Your accountant may have tax issues that may favor form based on overall performance as well. Good luck. Kindly rate me five stars.
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Customer reply replied 12 months ago
I'm just thinking the way people like to sue for stupid things. (Ex. Purchased a candle from my store and they burn themselves or house catches fire) Not that I have a lot of assets. Just trying to think outside the box before it is too late.
Business Lawyer: Michael Bradley,
 replied 12 months ago
Michael Bradley
Category: Business Law
Satisfied Customers: 1,434
Experience: Owner at The Protection Group LLC
Verified
What state?
You are looking to go from sole proprietor to LLC correct?
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Customer reply replied 12 months ago
Pennsylvania, yes, sole proprietor to a single member LLC
Business Lawyer: Michael Bradley,
 replied 12 months ago

It is in my opinion, that it would be smart to open up an LLC. It gives you another layer of protection as you were saying. I do not agree with the advice the prior expert gave you. I have opened up multiple Pennsylvania LLCs for clients. I think it's a smart move. Once you open up the LLC, I would also obtain a federal EIN number if you do not already have one. Where in Pennsylvania are you?

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Customer reply replied 12 months ago
I am located in Berks County. I currently have an EIN with my sole proprietorship as well as a PA Sales Tax license. Would both of those have to be changed? Would you recommend using Legal Zoom? I just want to be sure I have all of my basis covered.
Business Lawyer: Michael Bradley,
 replied 12 months ago

To be honest, I do not recommend companies like LegalZoom. While they are set up and run by attorneys, they are offering help in all 50 states. I do not believe that day have enough knowledge of the laws in each particular state.

If you want, I could help you set up the LLC for an additional fee. I am licensed in Pennsylvania.

Even though you have an EIN, I would get a new one for the LLC. I would contact Harrisburg and inquire whether you can keep the same PA sales tax license and simply transfer or would they need a new one.

I have set up over 100 LLCs in Pennsylvania.

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Customer reply replied 12 months ago
I know they left me keep my previous number when I changed my store name back in August. What would the cost be for you to prepare and covert to an LLC?
Business Lawyer: Michael Bradley,
 replied 12 months ago

To set up the LLC, including the fee to Harrisburg and the fee to publish the LLC, I would charge $400. The above fees are $200.

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Customer reply replied 11 months ago
How long does the process take?
Business Lawyer: Michael Bradley,
 replied 11 months ago

once mailed it takes few days to get it back from Harrisburg.

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Customer reply replied 11 months ago
Maybe you dont know the answer to this question. What, if any, would the tax benefits be to go from a sole proprietorship to an LLC be? In the event i proceed with this, do I contact your office to set up an appointment? Or can it be done via email? I would assume you would prefer a better way to do this rather than through this site. In the event I would decide to get married would anything need to change with the LLC? Would you recommend something other than an LLC? Again, just trying to cover all of my basis.
Business Lawyer: Michael Bradley,
 replied 11 months ago

The benefits of creating an LLC typically outweigh any perceived disadvantages and are typically unavailable to sole proprietorships and general partnerships.

  • Protected assets. LLCs provide limited liability protection to their owners (members), who are typically not personally responsible for the business debts and liabilities of the LLC. Creditors cannot pursue the personal assets (house, savings accounts, etc.) of the owners to pay business debts. Conversely, in a sole proprietorship or general partnership, owners and the business are legally considered the same—leaving personal assets vulnerable.
  • Pass-through taxation. LLCs typically do not pay taxes at the business level. Any business income or loss is "passed-through" to owners and reported on their personal income tax returns. Any tax due is paid at the individual level.
  • Heightened credibility. Forming an LLC may help a new business establish credibility with potential customers, employees, vendors and partners because they see you have made a formal commitment to your business.
  • Limited compliance requirements. LLCs face fewer state-imposed annual requirements and ongoing formalities than S corporations and C corporations.
  • Flexible management structure. LLCs are free to establish any organizational structure agreed upon by the company owners. LLCs can be managed by the owners (members) or by managers, unlike corporations which have a board of directors who oversee the major business decisions of the company and officers who manage the day-to-day affairs.
  • Few restrictions. There are few restrictions on who can be an LLC owner or how many owners an LLC may have (unlike S corporations).

To set up the LLC with me I would invoice you through Paypal and the rest can be done through emails.

If you got married nothing would need to change with the LLC.

I would recommend the LLC, I have done 10 times more or those than a corporation

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