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Re: Separate Entity vs DBA ssnneeaakk1234 11-09-2007
Posted by ssnneeaakk1234 on November 9, 2007, 6:56 am
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> ssnneeaakk1...@yahoo.com wrote:

>> 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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Posted by Seth on November 10, 2007, 5:20 am
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> 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?

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

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Stuart A. Bronstein on November 11, 2007, 4:22 am
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sethb@panix.com (Seth) wrote:

> 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).

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

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Stuart A. Bronstein on November 10, 2007, 5:20 am
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ssnneeaakk1234@yahoo.com wrote:

>> 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?

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

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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