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Why you SHOULDN’T start a LLC as an Immigrant with an ITIN, EIN, SSN

Updated: Dec 27, 2022

Deciding what type of business structure is hard since you have to consider various things. That's why we break them down for you. This is why you shouldn't start an LLC.

What is an LLC?

According to the IRS, an LLC is a limited liability company, a type of business structure. However, every state might have different regulations; check with your state for the regulations and requirements to start an LLC. The biggest difference between a sole proprietor and LLC is that it provides limited liability.

*However, certain businesses cannot become LLCs. Examples include banks and insurance companies.

This is why you shouldn't start an LLC.

  1. It is more expensive to start, making this an expensive option if you are a small business owner and don't have much money to start with.

  2. It requires more paperwork. If you file for an LLC, you will need articles of organization, operating agreement and you must get permits and licenses from the city, state, region, county, and federal government. (visit calgold if you are in CA) Each license and permit has different costs associated with it.

  3. If you have not made any income and are not sure if your business will succeed, then we recommend not starting an LLC since you will have to pay more to set it up.

Examples of businesses that don't need to be an LLC

1) Local Grocery Store - why? low risk to get sued or someone getting injured

2) Any form of Freelance Writer, Website Developer, Graphic Designer, etc. - why? low risk to get sued or someone getting injured

3) Laundromat Business - why? low risk to get sued or someone getting injured

Reference: NOLO Working for yourself guide, IRS - LLC Section

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