I don't have a company car and I'm not going to take the firm into debt. So I can't run over someone, nor would the banks have any reason to come after my money. If I mess up a drawing and someone sues me, my understanding is that is purely professional negligence and has nothing to do with the personal asset protection of being in a corporation.
Are there significant tax benefits? (I know I should talk to an accountant.)
It's legal in my state to be a sole proprietor architect (the business license actually comes with the 'professional privilege.') I'm having trouble seeing why I should form an LLC although it seems like the cool thing to do. But I would get any coverage I need from insurance anyway?
Thanks
x-jla
Mar 6, 18 7:20 pm
a single member LLC is treated the same as far as taxes go.
x-jla
Mar 6, 18 7:20 pm
Imo it’s very little money and effort to set up...no reason not to
full ofit
Mar 7, 18 9:32 am
As I'm bootstrapping my way in here it's at least $300 to set up the LLC, which isn't a lot but enough that I started this thread. I'll probably still end up doing it, but besides the nice letters by my name I can't find any real reason to do it. It does seem like a good idea for futureproofing firm growth.
Bloopox
Mar 6, 18 8:51 pm
If you're an LLC your creditors can't go after your personal possessions - they can only go after the firm's assets.
BulgarBlogger
Mar 6, 18 8:55 pm
LLC's are not allowed in CA or NY
Miles Jaffe
Mar 6, 18 9:46 pm
False.
BulgarBlogger
Mar 6, 18 11:11 pm
I obviously meant to offer architectural services..
Architecture firms in NY are permitted to be PLLCs. A PLLC is a type of LLC. An architecture firm in NY that's organized as a PLLC is allowed to use "LLC" in its firm name, which has been known to lead to some confusion among those reporting firms for the presumed infraction.
BulgarBlogger
Mar 7, 18 1:03 pm
You can easily check via the NYS corporation search...
JBeaumont
Mar 7, 18 1:10 pm
I know. But I'm also aware from personal experience that being on that roster doesn't necessarily stop confused people from jumping to conclusions and filing unfounded complaints.
BulgarBlogger
Mar 7, 18 1:15 pm
Here's the thing... if you are aware of the particularities, why expose yourself? In other words, if you know that regular LLC's cannot offer professional services, then even if PLLC's are allowed to call themselves LLC's, why even bother putting an LLC suffix in your firm name to begin with? I think that there is equal ignorance on the part of architects when starting a business and they rely too much on lawyers... same thing with architects' reliance on expediters. This stuff isn't rocket science...
BulgarBlogger
Mar 7, 18 1:17 pm
Also, point me to where on the NYS website, does it say you are allowed to use LLC instead of PLLC?
JBeaumont
Mar 7, 18 1:27 pm
The reason is usually that the firm does not want to use a different name in different states, and is already "Joe Architect, LLC" prior to taking on work in NY. I'm not aware that a NYS website states anywhere that a PLLC can call itself an LLC. That is probably one of the reasons that there is confusion. Nonetheless, it is legal to do so.
sameolddoctor
Mar 6, 18 9:42 pm
I made a S-Corp for myself. I have to pay $800 to CA every year, but it was the best and most flexible for payroll etc and for accepting payments for overseas projects. But yes, you need to talk to an CPA to get to the right answer.
OneLostArchitect
Mar 6, 18 11:15 pm
llc protects your personal assets... client won’t be able to go after the roof over your head if the shit hits the fan
full ofit
Mar 7, 18 9:30 am
Depends on what kind of shit, correct? Under what circumstances would the LLC protect me?
rcz1001
Jan 4, 22 2:12 pm
full ofit,
This depends on the laws and prior court cases that may establish precedence. In some ways, it will protect your personal assets especially if you establish contractual arrangements under your name. You have to treat the entire operations of the business as a separate legal person. You would want to have a seperate bank account for the business from your personal account. Courts have disregarded the limited liability protection provisions of an LLC and corporations in the past when they determined it is really operationally a sole-proprietorship... effectively that is called "piercing the veil" in legal parlance. Additionally, LLCs and corporations' limited liability protection does not limit the professional liability for any tort, negligence, errors & omissions you make as a professional. That is held against the person who does the work... especially a licensed architect. Technically, you can not shield yourself from those issues by forming an LLC or corporation.
A professional is personally liable for their professional decisions. Professional liability is a personal liability. That is why there is this thing called professional liability insurance. Courts in all states of the United States, have over time neutered limited liability provisions. You can't just use a fictitious shell entity to shield yourself from such things. Too many lawyers, doctors and others have ruined that. LLCs and corporations would protect or limit your liability from that of the negligence and wrong and contract issues that arises from that of your business partners (co-owners). That is the main reason for the limited liability provision so that if one partner put the business into a costly lawsuit resulting in ruling against the company that will end up costing say, a million dollars.
The individual who did the wrong *may* (depending on the facts of the case) be held personally liable (especially if the case is a matter of negligence/tort/malpractice, etc.) but the other owners of the business would not be personally liable so they may lose their equity interest in the business or liable to their percentage of the company and the funds of the business as the funds in the business account(s) would be first target. It would not (under most circumstances) not go beyond the business assets to the individuals' personal assets.
If you really REALLY want to know more about the subject matter, you may want to talk to an attorney that is familiar with this subject matter especially where you intend to practice or conduct business (not just where you're your business is located but the extent of your business activities extends to). NOTE: Your clients location and their state does matter because those project locations are going to determine the extent of what states or jurisdictions you conduct business activity in.
Limited Liability provisions of LLCs, Corporations, etc. are not impervious shields and it is very much limited in case of single-owner LLCs/corporations/etc. as that is usually seen as essentially a sham entity and therefore the attorneys suing you would be more likely to succeed at piercing the veil in the courts because usually, people usually don't go through the formalities that is required to treat it as a separate legal person like co-mingling business and personal funds and all. There has in fact been some court cases on the matters. Off the top of my head, I can not recall the name of the court cases but I may point to them in the future if such cases are necessary for a source.
whistler
Jan 4, 22 2:29 pm
Sole proprietorship is really only good for when you are just starting out and maybe when consulting during retirement. Otherwise the Corporation is the way to go.
I don't have a company car and I'm not going to take the firm into debt. So I can't run over someone, nor would the banks have any reason to come after my money. If I mess up a drawing and someone sues me, my understanding is that is purely professional negligence and has nothing to do with the personal asset protection of being in a corporation.
Are there significant tax benefits? (I know I should talk to an accountant.)
It's legal in my state to be a sole proprietor architect (the business license actually comes with the 'professional privilege.') I'm having trouble seeing why I should form an LLC although it seems like the cool thing to do. But I would get any coverage I need from insurance anyway?
Thanks
a single member LLC is treated the same as far as taxes go.
Imo it’s very little money and effort to set up...no reason not to
As I'm bootstrapping my way in here it's at least $300 to set up the LLC, which isn't a lot but enough that I started this thread. I'll probably still end up doing it, but besides the nice letters by my name I can't find any real reason to do it. It does seem like a good idea for futureproofing firm growth.
If you're an LLC your creditors can't go after your personal possessions - they can only go after the firm's assets.
LLC's are not allowed in CA or NY
False.
I obviously meant to offer architectural services..
https://www.llcuniversity.com/...
http://www.op.nysed.gov/prof/a...
Architecture firms in NY are permitted to be PLLCs. A PLLC is a type of LLC. An architecture firm in NY that's organized as a PLLC is allowed to use "LLC" in its firm name, which has been known to lead to some confusion among those reporting firms for the presumed infraction.
You can easily check via the NYS corporation search...
I know. But I'm also aware from personal experience that being on that roster doesn't necessarily stop confused people from jumping to conclusions and filing unfounded complaints.
Here's the thing... if you are aware of the particularities, why expose yourself? In other words, if you know that regular LLC's cannot offer professional services, then even if PLLC's are allowed to call themselves LLC's, why even bother putting an LLC suffix in your firm name to begin with? I think that there is equal ignorance on the part of architects when starting a business and they rely too much on lawyers... same thing with architects' reliance on expediters. This stuff isn't rocket science...
Also, point me to where on the NYS website, does it say you are allowed to use LLC instead of PLLC?
The reason is usually that the firm does not want to use a different name in different states, and is already "Joe Architect, LLC" prior to taking on work in NY. I'm not aware that a NYS website states anywhere that a PLLC can call itself an LLC. That is probably one of the reasons that there is confusion. Nonetheless, it is legal to do so.
I made a S-Corp for myself. I have to pay $800 to CA every year, but it was the best and most flexible for payroll etc and for accepting payments for overseas projects. But yes, you need to talk to an CPA to get to the right answer.
llc protects your personal assets... client won’t be able to go after the roof over your head if the shit hits the fan
Depends on what kind of shit, correct? Under what circumstances would the LLC protect me?
full ofit,
This depends on the laws and prior court cases that may establish precedence. In some ways, it will protect your personal assets especially if you establish contractual arrangements under your name. You have to treat the entire operations of the business as a separate legal person. You would want to have a seperate bank account for the business from your personal account. Courts have disregarded the limited liability protection provisions of an LLC and corporations in the past when they determined it is really operationally a sole-proprietorship... effectively that is called "piercing the veil" in legal parlance. Additionally, LLCs and corporations' limited liability protection does not limit the professional liability for any tort, negligence, errors & omissions you make as a professional. That is held against the person who does the work... especially a licensed architect. Technically, you can not shield yourself from those issues by forming an LLC or corporation.
A professional is personally liable for their professional decisions. Professional liability is a personal liability. That is why there is this thing called professional liability insurance. Courts in all states of the United States, have over time neutered limited liability provisions. You can't just use a fictitious shell entity to shield yourself from such things. Too many lawyers, doctors and others have ruined that. LLCs and corporations would protect or limit your liability from that of the negligence and wrong and contract issues that arises from that of your business partners (co-owners). That is the main reason for the limited liability provision so that if one partner put the business into a costly lawsuit resulting in ruling against the company that will end up costing say, a million dollars.
The individual who did the wrong *may* (depending on the facts of the case) be held personally liable (especially if the case is a matter of negligence/tort/malpractice, etc.) but the other owners of the business would not be personally liable so they may lose their equity interest in the business or liable to their percentage of the company and the funds of the business as the funds in the business account(s) would be first target. It would not (under most circumstances) not go beyond the business assets to the individuals' personal assets.
If you really REALLY want to know more about the subject matter, you may want to talk to an attorney that is familiar with this subject matter especially where you intend to practice or conduct business (not just where you're your business is located but the extent of your business activities extends to). NOTE: Your clients location and their state does matter because those project locations are going to determine the extent of what states or jurisdictions you conduct business activity in.
Limited Liability provisions of LLCs, Corporations, etc. are not impervious shields and it is very much limited in case of single-owner LLCs/corporations/etc. as that is usually seen as essentially a sham entity and therefore the attorneys suing you would be more likely to succeed at piercing the veil in the courts because usually, people usually don't go through the formalities that is required to treat it as a separate legal person like co-mingling business and personal funds and all. There has in fact been some court cases on the matters. Off the top of my head, I can not recall the name of the court cases but I may point to them in the future if such cases are necessary for a source.
Sole proprietorship is really only good for when you are just starting out and maybe when consulting during retirement. Otherwise the Corporation is the way to go.