I was wondering how important people think it is to run as an official business rather than sole trader(s) in un-written law partnership or whatever it is called. Does the ltd/llc/plc/llp matter?

Liability is the main concern here, lets say your business does well, you end up making profit, you buy a house, a nice car, some stocks, and put some money in the bank. Then a law suit comes around, a DBA has unlimited liability you could lose all that, forming an LLC places the liability on the corporation and not directly on you, so you do not end up losing all that you built up.

The various forms of partnership and corporations do matter but would be best discussed with a legal expert and an accountant to determine what form is right for you and your business.

Yes it does matter, you're not legitimate until the business is registered.

While you are very small you can do a DBA, of course I did not own a house or car worth more than $3000 at that point. If you have something of value that you can be sued for I suggest a LLC at minimum.

well i think you only need to get llc and such if you make more than 30k per year or so....

Yes it does matter, you're not legitimate until the business is registered.

lol, thats not true at all. I know someone that makes $150k a year and is setup just as a sole proprietorship.

As mentioned it is more secure for yourself if you register as an LLC. I don't know how it is there, but here it was pretty simple to register, and only cost $125. Well worth it IMO.

The price to register may not only be that $125. When I registered as a LLC it cost over $500 (including registration, registered agent, tax id, etc), however, you can also register your company for less if you leave off a few features.

But no matter how much it costs, its worth it in the long run. Owning a LLC is just like paying insurance. You could get along fine never paying health insurance, but if you ever get in a car crash (get sued by a client) you're going to be really happy to have it. Because even though you have some broken bones (lawyer fees, settlement), you're still going to walk away without too much financial damage.

Well you see, the people in our company are 2 from UK and one from Canada. We want to register as a company in the UK, but as an LLP. This is a limited liability partnership. Thats our plan anyway. It basically means the company has no annual income forms or anything, we only pay tax on what we earn by our selves, as in a partnership (on our own yearly income tax report, but the company pays no official wages or tax), but, we are not liable through the company.

Probably a good way to go, sounds the same as forming a LLC essentially, and by essentially, I mean exactly.

Awesome, perfecto, I've just emailed the companies house in the UK (they do company stuff) about it.

Liability is the main concern here, lets say your business does well, you end up making profit, you buy a house, a nice car, some stocks, and put some money in the bank. Then a law suit comes around, a DBA has unlimited liability you could lose all that, forming an LLC places the liability on the corporation and not directly on you, so you do not end up losing all that you built up.

The various forms of partnership and corporations do matter but would be best discussed with a legal expert and an accountant to determine what form is right for you and your business.

You are still just as liable as a sole propriety as an LLC. your debts can be enforced on you, and they can still sue you. It's been done thousands of times. It doesn't work the way it use to.

More than anything they change the taxes

You are still just as liable as a sole propriety as an LLC.

Members of an LLC are protected from liability for acts and debts of the LLC, where as sole proprietors are not. As to the tax advantages, I agree. A standard C-Corp subjects one to double-taxation, and a sole proprietorship comes with self-employment taxes, so an LLC is perfect for professional firms and service businesses.

You're welcome to believe you aren't liable all you want. It's not true. If your LLC incurs debt they will come after you if it's not paid, and win.

I've seen it first hand.

My business partner had an LLC with 2 other people about 10 years ago. They skipped town and took all the money. Come tax time the LLC couldn't pay. So 5 years later the guy refinanced his house to build an addition. The day he went to pick up the check the IRS was there too, and took $80,000.

My business partner had an LLC with 2 other people about 10 years ago. They skipped town and took all the money. Come tax time the LLC couldn't pay. So 5 years later the guy refinanced his house to build an addition. The day he went to pick up the check the IRS was there too, and took $80,000.

No business entity is free from the liability of extortion. What an LLC does is "limit" liability. For instance, if you end your LLC owing your venders money, they cannot take your personal assets. In the sole proprietorship model, they can. In other words, you are not "just as liable" with an LLC as you would be with a sole proprietorship or general partnership.

OK, good luck with that :)

It's not just the act of registering a LLC that grants you limited liability protection... It's properly running your business in a way which separates you and your business as separate entities.

For example, see:
http://www.wrlawfirm.com/Articles/wrm.article.MaintainingLLCLiabilityProtection.html

To highlight, reasons a LLC can loose liability protection:

Disregard of LLC formalities,
Inadequate capitalization,
Intermingling of funds,
Overlap in ownership, officers, directors and personnel,
Common office space, address and telephone numbers of the business entity and owner,
The amount of discretion showed by the allegedly dominated LLC,
Whether the LLC is treated as an independent profit center,
Whether others pay or guarantee debts of the dominated LLC,
Intermingling of property between the alleged dominator and the LLC...

Sure, you might know friends who had their personal assets taken tho they had a LLC. But, it's likely because a court decided the LLC was not meeting it's requirements and therefore did not limit liability.

Sure, you might know friends who had their personal assets taken tho they had a LLC. But, it's likely because a court decided the LLC was not meeting it's requirements and therefore did not limit liability.

Its the same with LLP's in the UK. Its very easy to go after the partners in an LLP for the debts of the business and win. Unlike an LTD where you'd have to prove the directors deliberately traded whilst the company was insolvent.

There really is no (valid) reason why any UK operated business should not become a "proper" company and register an LTD or PLC with Companies House.