What is the common business form for a home inspector?
Sole Proprietor
LLC
Corporation
S. Corp
Living on a state line would I need to be registered in both states to conduct home inspections? Both states have the same guidelines as far as licensing.
I asked my CPA that question about 10 years ago. He told me since if I think I am going get sued then I need to not be a sole proprietor and go ahead and pay more taxes as a LLC. I like paying very little taxes, so I have never switched. Since the bank owns about everything I have, I really have nothing to loose if I get sued.
I am living the American dream. Sad but true.
When you have an LLC you are an “owner”, not a sole proprietor.
When you have partners, you are all “owners” or “members”.
An LLC provides you with the protection of a corporation but with the ease of tax filing methods the same as a sole proprietor.
There are no tax advantages by having a sole proprietorship vs an LLC, all net income is taxed at the personal rate both ways.
The absolute worst business form for an inspector is sole proprietor.
Also, I know someone that got sued (a builder) and no, you can not bankrupt this type of debt. If you can’t pay it, you have a judgment that follows you until you sell real estate then it is taken from the proceeds. In some cases, it may be deducted from your pay (garnish) if you end up working for someone else.
Maybe Joe Ferry will jump in here and confirm all of this if anyone does not believe it.
The best thing for an inspector to be is not “judgment proof” (which is impossible), but rather “collection proof.” The way to be “collection proof” is to never own any attachable assets.
It would be interesting to get a legal opinion on the bankrupt portion of your post. I do believe, if it is a civil judgement, it can be discharged in in a bankrupt filing. If it is a criminal matter that requires restitution, then that probably would not be discharged in a bankrupt court.
If what you say is true, then explain just how so many contractors bankrupt, and are back in business with in weeks???