Corporations vs Sole Proprietorship….
Corporations:
-Require filing with the Secretary of State
-Annual payments to the SOS and submission of a statement of information
-Minimum tax payments are required annually whether your business was operating or not.
-Failure to comply with any of the above requirements, your business will be subject to suspension with the Secretary of State (if your entity is sued whilst having a suspended status, you automatically lose)
-If your entity is sued, it will have little impact on you personally. Worst case scenario, you can refile with the SOS using a different entity name (you can add a “.” or and “Inc” to your current DBA)
-All transactions that are made for the business need to be processed using a separate banking account. In the event of an audit, you will forfeit your ability to deduct any expenses that were not conducted on the business account l.
Sole Proprietorship:
-If you’re entity is sued, the lawsuit will impact your personal assets. It’s just like you’re getting sued personally.
-no requirements to file anything With the secretary of state and minimum annual tax
-ability to have business transactions on personal accounts
