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Re: Separate Entity vs DBA

> I am incorporated as an S Corp for my primary business,

>> which is web site development. >> >> But I am soon going to be creating a website to sell a few >> products online. >> >> For this new venture I am considering if I should create a >> DBA off of my current S Corp, or create a new LLC or S Corp. >> >> I am thinking the easiest route would be to create an LLC >> (which has a lot less paperwork than the S Corp) and then >> have the LLC "zero out" every month by paying my S Corp a >> fee for the web development work and hosting. >> >> Is there anything wrong with that type of setup? > Yes. Why not just operate as a sole proprietor (Schedule > C/SE), using a DBA if you wish, and avoid the complications. > That's how you will be taxed anyway.

If I did "My Current Company" DBA "My New Company" or "Me (individual)" DBA "My New Company" wouldn't I have less protection against litigation against "My New Company"? In other words, if I did a DBA and "My New Company" were to be sued, I want to be personally protected against that, and I want my main business "My Current Company" to be protected from it as well. Am I wrong that by doing a DBA I would open myself to these types of liabilities?

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Reply to
ssnneeaakk1234
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Operating under a DBA has nothing to do with your form of doing business. A corporation or an LLC can also operate under a DBA. The most common situation is when you want to use a certain business name, but it conflicts with another corporation or LLC in your state and can't get the official name you want. As far as your main point, yes, a corporation or an LLC can protect your non-business assets from creditors of the business. Often having a good insurance policy is better, since it may be less expensive and protect you more. If you are planning insurance and want the extra protection, then an LLC may be able to provide it. You still will have to be careful to respect the business entity and avoid the ability to pierce the corporate veil. Stu

Reply to
Stuart A. Bronstein

I think you're wrong in thinking that setting up a corporation will protect you from most liabilities. It won't; if the suit is over something you did, you're liable, whether or not you did it as an agent for a corporation (in that case, the corporation is _also_ liable). Seth

Reply to
Seth

That's true for torts but not with respect to contractual issues. If the sole owner of a corporation signs a contract as president and no personal guarantee is given, only the corporation is liable, not the president personally. As far as torts are concerned, those can generally be insured against, and insurance is often cheaper than the costs of creating and maintaining a corporation, if you have to choose between the two. Stu

Reply to
Stuart A. Bronstein

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