Question

Which business to register

Forum|Forum|3 years ago
August 31, 2022
1 reply
0 views

Dear TT,

I am going to be starting a consultancy business that will be closely tied to my current firm. I will be working for myself, therefore only me in the business. Is the best business type to register for an LLC and for tax purposes is it best to record the business with the IRS as a sole proprietor?

Donna F 77

Congratulations on your new business! The type of business entity that you choose will be based on your specific circumstances. We would recommend speaking with a tax advisor to determine the best route for you. However, a lot of businesses start out as sole proprietors initially. In regards to starting an LLC - that's a great choice for the liability protection against your personal assets. If you are a single member LLC, you would file your federal tax return as a sole proprietor since IRS does not acknowledge LLCs.

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G

grantemary2Author

Thank you Donna for your answer. It confirms what I have planned to do. I the only remaining questions are: 1) are there any downsides to registering as an LLC but reporting to the IRS as a sole proprietor?

2) Does turbotax offer tax advisor services if I don't have my own tax advisor?

Donna F 77

Unfortunately I can't really answer your question properly because I don't know your complete situation. I can't think of any "down side" to choosing to file taxes as a sole proprietor when you are first starting out. You are able to determine what type of tax entity your LLC will file as for federal tax purposes. You could elect to be an S-corporation, partnership (if there is more than one member), etc. At this time TurboTax does not have advising services.

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