Client called and wanted to incorporate. He actually does not have a business now but plans to be a manufacture's rep. He wanted to incorporate, primarily, to be protected. I do not know much about an LLC but advised him that, in order to get what he wanted was to form an LLC and be taxed on a schedule C. This does keep things rather simple. Is this good advice?
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Depends
Depends, like anything in taxes. Depends on state law. But, in general, it's easier to go up the chain of business entities if needed than to back down. Finding out a corporation or whatever is more record-keeping than client expected and having to dissolve with tax consequences is not fun. What does he need protection from? How quickly does he expect to be profitable for tax purposes? Maybe just start as a sole proprietor with a good insurance policy. He can form an LLC if needed, and if a sole member, still report on a schedule C; but there may be state minimum fees (CT is $250, but NY and CA are more like $800). If he hasn't been in business yet, start simple. He can always move to a more complex entity when he sees a need.
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