[grosgrainobsessed]

The small business department really shouldn't be giving out this advice. They often give out misinformation as well. You know how government departments are, you can call 3 times and ask the same question and get 3 different answers from 3 different people everytime.

As for LLC, they don't offer much liability protection at all particularly for single member. That's a big part of the reason I felt kind of scr*wed after investing all that money into doing so. It was a huge waste. Because you still file as sole proprietor with a single member LLC and the IRS still sees you this way, it's likely that a judge or jury would as well in the event you should wind up in a legal situation. And, if that's the case, you'd still be personally liable including your personal assests. Incorporating offers more protection in terms of liability. LLC is still relatively new in comparison to other business structures, so there hasn't been enough time to test it out in terms of what actually happens to those that have LLC's and have been sued, etc. There seems to be a big grey area as to whether people are still considered personally liable when they are the only member of the LLC. You can talk to one attorney and they'll tell you that you are protected. Talk to another and they'll say, no, no case such and such was an LLC and because they were single memeber and they filed taxes as sole proprietor, they were held personally liable. Just like the attorney advised you, even if you had an LLC, you could still be found liable and taken for personal assets, hence the reason they recommended liablity insurance...so ya see, the LLC doesn't seem to offer the level of proection peopel think it does. Though, insurance is always an option to consider for everyone.

That was not worth the risk to me, so I incorporated. I would not think that anything is 100%, but incorporating offered me much more protection and peace of mind than the LLC, along with some tax benefits as well. The cost varies from state to state, and it varies pretty widely. It's hard to say whether it's worth it. I think what I would consider most is how serious you are about your business, if you are going to wholesale, if you are going to do shows, etc. If you are doing it as a hobby, I may be less inclined to bother with formaliziing the busines, but again, you must weigh your risks when it comes to liablity. That's why there is no perfect answer for anyone and you get so many conflicting opinions.