Hey Tax Guru! This site is awesome!! But I'm still confused! I have been told so many different opinions on my business structure, my head is spinning. I am starting a business based in Tennessee, where I will be driving and the initial investment is under $2000. I will carry commercial and business liability insurance to cover any boo-boo's. My wife and I will be the sole owners/employees of the business and we expect to net around $80,000 for the year. I was going to start an LLC but was told that the LLC would not give the liability protection since I would be considered a "disgarded entity" since we have no employees. If I incorporate as an S corporation, the profits would kill us on taxes. We would either pass all profits along as income and get hit with 15.3% S/E taxes...or with the 50-50 split investment ($1000 each), I would take a 30K salary and split the 50K profit 2 ways. The problem is that we would each pay capital gains tax on $$24,000 ($25,000 profit-$1000 investment). I was told to run as a sole propiertorship since I would have business liability anyway and would be covered since the LLC would be considered a "disgarded entity" and not really benefit me. And I'm not really sure if the LLC would hit me with capital gains tax also, as in the example above. PLEASE HELP! Thank you!