The 5 Things to Consider When Choosing Between an LLC vs. DBA in Los Angeles
Making an informed decision when choosing between a DBA vs3 min read
Making an informed decision when choosing between a DBA vs. LLC in Los Angeles is crucial to one’s clinical business. This article will explore the five things to consider most when deciding between an LLC or a DBA, also known as a Doing Business As name, in the City of Los Angeles. Whether you’re an entrepreneur, an athlete, an artist, or an investor, understanding the guidelines, advantages, and disadvantages of setting up a legal entity is key. Sitting down with a local legal counsel to make sure you’re in compliance and making an informed decision is paramount. It’s important to understand the law in your local community when setting up a legal entity.
Let’s look at the five things to consider when choosing between an LLC vs DBA in the City of Los Angeles.
1. Limited Liability Protection for Owners
Choosing an LLC vs DBA option in Los Angeles offers different levels of protection to its owners. With an LLC, personal assets and those of the business are fully protected from any liabilities and issues that may arise from the business operating. This personal safety net is not extended through a DBA in Los Angeles.
2. Costs of Registration
The one advantage of setting up a DBA in Los Angeles over an LLC is the cost of registration. Registering a DBA is significantly cheaper than registering an LLC in Los Angeles. On average, registering an LLC in Los Angeles can cost between $500-$700, as opposed to the $50-$100 for registering a DBA.
3. Tax Implications
Choosing an LLC or a DBA in Los Angeles can have different tax implications. A DBA in Los Angeles can be set up as an individual entity or as part of an existing LLC. When registered as an individual, taxes from the business are reported to the IRS on Schedule C. For existing LLCs, the entity should be registered with the state and the taxes are paid as part of the LLC. As far as taxes go, an LLC in Los Angeles is a separate entity, and the LLC pays taxes as a corporate body.
4. Operating Agreement Needed
A business operating as an LLC in Los Angeles must have an operating agreement in place. This is a binding document that outlines the purpose of the business and the roles and responsibilities of each member. On the other hand, registering a DBA in Los Angeles does not require an operating agreement, as it is a sole proprietorship.
5.Business Structuring Options
A big advantage of forming an LLC in Los Angeles is the different structures it allows for your business. It’s possible to make your LLC a limited liability company, a professional organization, a foreign corporation, and a corporation. With a DBA in Los Angeles, you have no options as to how your business is structured, it can only be set up as a sole proprietorship.
It’s important to understand the consequences of forming a DBA in Los Angeles vs. registering an LLC in Los Angeles. Taking the time to understand how each option affects your liability, your personal assets, and the taxes you pay can save you a lot of stress and money in the long run. It’s always wise to sit down with a knowledgeable, experienced Los Angeles lawyer to get an understanding of all of the different factors at play when considering whether to select an LLC vs DBA option in Los Angeles.
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