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    Independent Contractor or LLC? (energy efficiency work)
    I'm currently studying for my MBA, but have very little actual business experience so I could use some advice. A friend of mine is contemplating partnering with me to start a business that will assess the energy efficiency of buildings and do some simple work to correct issues (basically finding and sealing leaks to make air conditioning more efficient and things of that nature). My friend has done this sort of work before, already has the tools he would need for it, and is properly licensed to do it. I plan to learn this as well, and to help with business related tasks like advertising or accounting.

    Currently, he works as an independent contractor, getting his clients from a friend through said friend's LLC. I'm trying to determine if an LLC is a better structure for him/us, but I'm having trouble finding concrete comparisons between the two structures. From what I can tell the differences are primarily in how taxes are filed and what happens in the event of a bankruptcy, and it's difficult to weigh that against the time/fees required to establish an LLC. Is there an easy way to break this down, or is perhaps one structure the obviously superior one in this situation?

    Furthermore, as I'm learned but inexperienced in business, I'm eager for any tips, tricks, or other insights into this situation or business creation/management at large, including any pitfalls I should potentially watch out for. I'm hoping this community can help me better navigate the establishment of my first business, as I know it can be both tricky and risky.

    Thanks in advance for the help!


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    Mongrel,

    Nice to chat with you. I too am pursuing an MBA. Based on what I have learned thus far, I think LLC is the way to go. The LLC will protect your personal assets in the event that say, a sealed air conditioner that you have worked on decides to stop working and the owners somehow manage to win a suit, which you understand I think because of your mention of how bankruptcy is handled. If you are an independent contractor working as a sole proprietor or partnership, and somehow lose a suit of this or any nature in which the business is named, then there is a good possibility that your personal bank accounts and assets will be targeted as a way to repay the balance ruled owed in their favor.


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