No magic number
Dear Dave,
I’m 26, and I’ve been running my own business as sole proprietor for a year-and-a-half. My gross revenues are about $94,000, and my personal net worth is around $68,000. Is there an asset level you recommend reaching before moving to LLC status?
Meghan
Dear Meghan,
There’s not really a magic number for this kind of thing. In your case, I wouldn’t go to the trouble for an LLC right now. You don’t need the hassle of extra paperwork and the expense of processing and filing fees. Just make sure you have normal, liability-type insurance in place. That shouldn’t cost a lot of money.
The main reason you would consider shifting to an LLC is if you had reached a point in life as a business owner where you were afraid you might have a target on your back. By that, I mean you would want protection in the event of a lawsuit if your company had grown to sizable proportions and you had begun to accumulate substantial personal assets.
At this stage I don’t think anyone’s going to bother you.
Dave
*Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.
