Changing From A Sole Proprietorship To An LLC Or Corporation

Written by Phil Thow

If you have always had the dream to work from home or to start your own business, there are several different types of business structures you need to be aware of. Most people don't do their research to understand how a Nevada LLC and a Nevada Corporation work and sometimes they forgo this process and operate independently as a sole proprietorship. A sole proprietor is responsible for paying all of their own taxes and the are taxed at the full 15.3% compared to Nevada Corporations and individuals that are employed through a company.

One of the most important things you can do for yourself is to operate as a Nevada Corporation or a Nevada LLC instead of as a sole proprietorship. Operating as a sole proprietorship is incredibly risky as your personal assets can be taken away from you if you are taken to court for negligence and bad debt problems.

Many people choose to continue operating as a sole proprietorship because they don't want to deal with the additional paperwork they are required to keep. When you declare a Nevada LLC or a Nevada Corporation, you must keep minutes and other records that indicate you are a legitimate company. These minutes are filed in a corporate book, which will come in handy if you are ever taken to court. You will only be rewarded with liability protection if you keep a corporate book and other records that are required by the state.

Meet with your CPA to discuss the different options that are out there and which ones can help your personal and business needs. Upon filing for a Nevada LLC or a Nevada Corporation, it is important to file all the other paperwork like your Federal ID number and your business license. It only takes a few minutes to file for your Federal ID number on the IRS website.