For the Veteran "Pro"s; Business set up as LLC or Sole Proprietor?

I'm slowly getting things setup for my leap into business. My insurance agent finally got me the necessary forms for liability, and equipment. One question was how my business was/is to be established, a Sole Proprietor or LLC? Now the upside she referenced was it would be a tax benefit to go the LLC route. If I understand that correctly, it protects my personal assets if my business were to be sued. FWIW, her husband is a business lawyer, that I have used on many occasions.

She also stated that most business insurers they deal with require at least 3yrs in business. So what's a person suppose to do, operate for 3yrs without? Sounds kinda dumb if you ask me, or that filing as an LLC requires that much time in business before. Still kinda dumb.
Do I embellish a little since I have been paid cash for a few shoots over the last three or four years. When I say few, yep just about that many, mainly because I wanted the learning experience, was not in business, just a hobby, so did not require or want paid.

It's hard when you're away M-F to setup necessary appointments, like meeting with my attorney to hash things like this out. But slowly getting there.

So for those established pros, which are you using, LLC or Sole Proprietor?

Sole proprietor.

Wish I could remember the specific reasons but it's just been too long...'Sub S Corp' here....which I believe is very similar to an LLC though there may be tax differences. And, fwiw, I had a business insurance policy right out of the gate. Again, maybe things have changed?
Best of luck-

frozenframe wrote in post #18140480
I'm slowly getting things setup for my leap into business. My insurance agent finally got me the necessary forms for liability, and equipment. One question was how my business was/is to be established, a Sole Proprietor or LLC? Now the upside she referenced was it would be a tax benefit to go the LLC route. If I understand that correctly, it protects my personal assets if my business were to be sued. FWIW, her husband is a business lawyer, that I have used on many occasions.

Depends on your state tax laws and particularly on the court liability precedents in your state. Some states make one form much more onerous than another, and as mentioned, some states have other forms such as "close hold" corporations that may be worth investigation.

Court precedents are important. In many states, the courts will "pierce the veil" in a heartbeat when an LLC is really a single person, and in those states they will still go after personal assets, particularly in injury cases. In those states, the LLC form is really for the protection of independent businessmen working together, such as a group of doctors in a private clinic. A malpractice suit against one doctor won't touch the other doctors.

Go with your local professional legal and tax advice.

That sounds bizarre, and I have a hard time believing it. Maybe what she meant was that insurance companies will require 3-year contracts, so if you quit in a year, you'll still be under contract and paying for the coverage for another two years.

Shop around. Find out what independent agents some of the other small businessmen you know are working with (restaurant owners, barbers, plumbers, et cetera) for liability coverage.