What Entity for an Indy?

or Register to post new content in the forum

11 RepliesJump to last post



  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
May 10, 2006 9:04 pm

For those of you who are indy, what type of business have you set up?  Sole prop, s-corp, etc.  I was thinking of starting an s-corp upon going indy.  How would one even go about setting one up?  Thanks in advance.

May 11, 2006 7:04 pm

my cpa said start w/ an LLC. Much simpler, easier, and enough to get going

May 11, 2006 11:02 pm

Do NOT take this as legal advice. Consult and attorney. Period.

An LLC will not be easier than an S-corp or sole-proprietorship.

You should first talk to an attorney. Find one interested in working with

you and one that has had experience in setting up LLC’s for individuals

within the advisory business. If you have partners, an LLC will address

the liability issue, buy-out provisions and other items of interest to the

maintenance of your practice. Setting up a proper LLC can range from

$1,000 to $5,000 depending on the level and depth within your LLC


I’ve been told by attorney’s who work with advisors that they will flat out

refuse to set up a practice within an S-corp or sole-prop. structure.

Also, it depends on what type of independent practice you own or will be

creating. If you are the true ‘independent’ and create your own RIA, then

the LLC may very well be the best way to go.

Again, consult an attorney - generally the first hour or consultation is

free. It’s certainly worth doing well vs. on the cheap.

Really… consult an attorney that you KNOW works in this area. If you are

working with a quasi-independent firm like LPL, they may have their own

resources and can direct you to appropriate counsel.

Good luck.


May 11, 2006 11:27 pm

Thank you for the reply.  I'm going indy solo on this, with a terrific assistant who I'd like to offer the possibility of sharing profit and eventual ownership with, so comments on that would be appreciated.

Also an issue on that, can I offer direct ownership to someone who isn't securities licensed, since all our revenue will come from securities, wrap fees, annuities, etc?

And no, I won't sell to her on the "eventual ownership" as Jones does!



May 11, 2006 11:49 pm

I should have thought that through a bit more. My situation is somewhat unique, no employee(s), couple other things are taken care of too. So that advice applied to ME only.


May 12, 2006 6:41 pm

Here’s another tidbit…

If you are going solo, but through a broker-dealer (like LPL) rather than

an RIA (like Schwab or Fidelity)… Be aware that your new firm (if a BD)

cannot pay your commissions and fees to anyone other than you, a

natural person. You cannot have them appoint the income to an S-corp,

or to an assistant. So, the income MUST pass through you. Now, if you

want to pay her a wage based on your anticipated past or forcasted

profitability, that’s a different story - However, I’m confident that you

can’t directly pay her a percentage of your revenues without her being a

registered individual.

Ownership is another story. However, unless she is a producing entity, I

wouldn’t do it. Pay her an attractive wage, send her and her husband on

a fully-paid vacation… but, don’t… don’t… give her ownership. Just my


If you were an RIA, you CAN have your revenues paid to an S-Corp or LLC.

But, if you are affiliating with a BD, you cannot.

You can take your commission/fees and deposit them into a S-corp

AFTER they are paid to you…, but they have to be paid to you first.

That’s the way the dollars work.


May 12, 2006 10:23 pm

I just did an S-Corp…didn’t see the LLC as necessary for me.  Captain is right, but all I had to do was set up an individual brokerage account at LPL which automatically transfers out to my business checking the same day.  I would imagine that most B/Ds are set up to accomodate an S-Corp or LLC.

May 12, 2006 10:26 pm

Also, I wouldn’t offer an assistant eventual ownership, as it is bound to create headaches later.  If you do a good job profit sharing or bonusing your assistant, ownership as an issue will never come up.

May 13, 2006 12:17 am

Thanks for the responses.  Any specific experiences with LPL?



May 13, 2006 12:48 am

LPL is my B/D

May 13, 2006 8:06 pm

I went S corp…cheaper and faster.  LLC would probably be better for liability reasons, but I needed it done before the long weekend if memory serves.