Episode 98: Business Entities with Braden Drake

Photo cred: https://dawnsilvaphoto.com/

As we bring 2018 to a close, many of us are re-evaluating our businesses, figuring out what’s working & what’s not working, and making goals for 2019. We figured this was an awesome time to invite Braden Drake onto the show to chat with us about business entities! Braden is a small business lawyer & tax lawyer here in San Diego, and he’s a genius at making hard to grasp (and let’s face it, boring) topics interesting!! On today’s episode, Braden helps explain the differences between sole proprietorships, LLCs, and S-Corps.

You DEFINITELY need to download this episode to get the full scoop and breakdown on each of these business entities, but here are some quick bullet points to get you started!

Sole Proprietorship: MOST of you (and us!) are probably this. This is basically what you are when you first start your business (unless you go into a general partnership with someone else). This is all fine & dandy, but the problem with being a sole proprietor is that your business has no liability protection. Meaning, if someone were to sue you, your whole livelihood beyond your business is at risk.

LLC: An LLC is basically protection from liability. It offers pass through taxation instead of double taxation (you’ll have to tune in to hear Braden talk about what exactly this entails), and basically is a good idea to save your personal assets from any business related liabilities.Braden suggests turning your sole prop into an LLC as soon as you can afford to do so. It doesn’t really complicate your tax return process at all, and is a pretty easy upgrade to make to your business!

S-Corp: An S-Corp isn’t actually one of the business entities, it’s more of a tax status. It’s a way to protect yourself from liability AND potentially save some tax dollars at the same time. You’re basically becoming an employee AND a shareholder of your business. You’ll split your salary & your distribution, which saves you money on self employment taxes on your distribution. You’ll pay yourself a reasonable amount (as determined by your area, experience, etc) & then distribute the rest throughout the year. It’s hard to know the best time to turn your business into an s-corp, so it’s best to work with a bookkeeper to get yourself on payroll, and a lawyer (like Braden!) to help you determine the best time to do this!

Again, we can’t stress enough how EASY Braden makes business entities seem when he talks about them. He adds way more valuable information than we could put in the blog, so you’ll definitely want to listen to the full episode!

Braden is SUPER generous and is giving PhotoSpark listeners a discount on his amazing Small Biz Start Up Guide! This guide is a 5 phase, no fuss, 100+ page eBook that helps new entrepreneurs navigate the small business planning, branding, and legal process. Just click on this link & enter the discount code PHOTOSPARK10.

If you want to learn more about Braden, or get in touch with him, here’s where you can find him!

Instagram: @bradenadamdrake

https://www.creativepreneurconsulting.com/

https://www.startupguide.biz/blog/biz-entity