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Which way to file mechanics lien?

I recently tried to start a new business in a commercial building in my area in Wisconsin. I was sold the building as turn key ready to work well the township and county had other ideas and I have been jobless and fighting to open ever since. I had started an LLC for the small engine repair shop. In the meantime since I couldnt open up my business at my location I decided I better fund some other work. So I went back into the trades as I was just before I started this LLC and took on a big project. I contracted a remodel job for a bar/restaurant plus living quarters. In my area. I have received very little payments and it appears as if the owners are going through some personal struggles. I'm near finished with job and I'm owed a pretty hefty lump sum. My question is if it is better to run this job through my new LLC to show some income in my business and have the protections of an LLC or am I; better off doing it as a sole proprietorship? Since my new business is in mechanics mostly not construction I'm thinking I need to do it as sole proprietor. If so what are the risks?

1 reply

Sep 10, 2021

"I contracted a remodel job for a bar/restaurant..." If there is a written contract, are you the party or is your LLC the party? If it is just you, or if there is no written contract and no other good reason why the owner believes they are contracting with an LLC instead of you in your personal capacity, then you are likely not afforded LLC liability protections... There are MANY moving parts to corporate form analysis and limited liability, and we would need to discuss in detail. The main reasons to consider whether income or losses should be run through an LLC or you as a sole proprietor may be for tax purposes. It is likely that income and/or losses will be reported on your Schedule C in your individual tax returns either way, so it may essentially be the same either way. You may have special tax considerations and I am not a tax attorney or a CPA, but I can help you evaluate these issues. However, you may benefit from stepping back for a moment and looking at the big picture. If you want limited liability protections, you will need to treat your LLC like a separate entity. A good start would be to have a separate bank account for the business, referencing your LLC as the contracting party in all of your contracts, a thoughtful single-member LLC operating agreement, and maintaining corporate records and meetings. I handle many small business general counsel and litigation matters. Here are a few examples of issues I have recently dealt with that seem similar to the issues you described above. https://www.michaeljohnsonlegal.com/blog/ When you have a moment, give me a call and lets discuss ways I can be helpful.

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