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Dave Says...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 …

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Dave Says...No Magic Number
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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,

dave-ramseyThere’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

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