Forming an LLC
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@nerdydad said in Forming an LLC:
@minion-queen said in Forming an LLC:
For personal financial protection purposes there is more as an S corp than an LLC. That is the biggest reason honestly.
I heard something one time about how one would want to stay LLC until they become profitable and then incorporate. How do you feel about that?
I'm guessing that Eddie is profitable. Otherwise why bother at all? It's not like he's going out and getting a loan and renting space and hiring employees, etc. Once he overcomes the cost of paying the attorney and accountant, he's likely profitable.
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@nerdydad said in Forming an LLC:
@minion-queen said in Forming an LLC:
For personal financial protection purposes there is more as an S corp than an LLC. That is the biggest reason honestly.
I heard something one time about how one would want to stay LLC until they become profitable and then incorporate. How do you feel about that?
LLC is incorporation. If they said that, they were confused. LLC, S, C, and B are all full incorporation.
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Some of the worlds largest companies are LLCs. Making profits is never a reason to stop being an LLC. S-Corps are limited to being much smaller than an LLC. LLC and C are the "big enterprise types", while S is an SMB only affair (limited to 75 investors.)
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@dashrender said in Forming an LLC:
@danp said in Forming an LLC:
Basically what @Dashrender said. I did the same thing about 18 years ago. The advantage of an S Corp is there is no tax consequence. All income from the business flows directly to your personal income, so no corp tax.
I'm pretty sure the LLC works the same way.
It's the C-corp that files it's own taxes, hence the corp tax.
LLC and S both offer pass through. S always has to file corporate taxes. LLCs only sometimes do. LLC is the one that makes this easier, not S.
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LLCs are open to all investors, not just Americans, can own and be owned by other companies, can have unlimited size. LLCs are informal and easy. S Corps have nearly all of the formality and requirements of C corps with a required board of directors and such. LLCs are allowed that, but it is not a legal requirement.
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@scottalanmiller As long as you have an officer acting on behalf of the LLC, filings and such, then that fulfills the requirements of the LLC. Correct?
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S corps are stock entities like C corps. Any S corp investor can sell stock. LLCs are an agreed upon entity that only exists as long as the owners agree to the situation. If someone wants to sell LLC ownership, all of the owners have to agree to it. It's more informal, S is very formal with traditional stock.
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@nerdydad said in Forming an LLC:
@scottalanmiller As long as you have an officer acting on behalf of the LLC, filings and such, then that fulfills the requirements of the LLC. Correct?
Don't think that you even need that. You need an owner, nothing more.
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S Corp mostly exists for the sole purpose of treating the owner as an employee and paying them as such, rather than through profits. But this only works if the pay rate is reasonably - meaning like what any employee would make. If you make big money as an S, you have all the same limitations again.
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@scottalanmiller said in Forming an LLC:
S Corp mostly exists for the sole purpose of treating the owner as an employee and paying them as such, rather than through profits. But this only works if the pay rate is reasonably - meaning like what any employee would make. If you make big money as an S, you have all the same limitations again.
That matches what I've read so far about contrasting an LLC to an S. Unless there is some significant financial benefit of an S, I will most likely go with the simplicity and informality of the LLC.
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@eddiejennings said in Forming an LLC:
@scottalanmiller said in Forming an LLC:
S Corp mostly exists for the sole purpose of treating the owner as an employee and paying them as such, rather than through profits. But this only works if the pay rate is reasonably - meaning like what any employee would make. If you make big money as an S, you have all the same limitations again.
That matches what I've read so far about contrasting an LLC to an S. Unless there is some significant financial benefit of an S, I will most likely go with the simplicity and informality of the LLC.
Yes, S are very special case, pain in the butt entities and a lot of states don't allow them.
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After some research and talking to some knowledgeable folks, it seems clear the best option for me is to form an LLC. It strikes the correct balance of protection and complexity for me.
The next challenge comes naming. The goal of the LLC is to be the business entity through which I do my various projects (saxophone lessons, percussion clinics, freelance IT and bench work, performance gigs, compositions, recordings). My projects fall into three general categories: music education, general music services, and IT services; thus, having one all-encompassing name isn't possible.
I believe my solution for this is to utilize DBAs. I have no desire to create a business entity for every type of project I do, but using DBAs registered by my LLC would allow me the flexibility of having naming that matches the project type with all of the legal and financial pointing to only one entity: the LLC.
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@eddiejennings said in Forming an LLC:
After some research and talking to some knowledgeable folks, it seems clear the best option for me is to form an LLC. It strikes the correct balance of protection and complexity for me.
The next challenge comes naming. The goal of the LLC is to be the business entity through which I do my various projects (saxophone lessons, percussion clinics, freelance IT and bench work, performance gigs, compositions, recordings). My projects fall into three general categories: music education, general music services, and IT services; thus, having one all-encompassing name isn't possible.
I believe my solution for this is to utilize DBAs. I have no desire to create a business entity for every type of project I do, but using DBAs registered by my LLC would allow me the flexibility of having naming that matches the project type with all of the legal and financial pointing to only one entity: the LLC.
How about:
The Edje Music, LLC.
The Edje IT, LLC.Make two, one for music and the other for IT. (if that's your real name anyways)
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Eddie and the Mangoes, Limited.
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@scottalanmiller said in Forming an LLC:
Eddie and the Mangoes, Limited.
Perfect. It sounds like an music group with IT experience.
LoL. -
Eddie Jenning Services, LLC.
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I decided on Eddie Jennings Services, LLC. Now I get to contact the Secretary of State's office (Georgia) on Tuesday, since (despite being less than 80 characters and me typing it 100% correctly on the web page) my confirmation E-mail for my name reservation reads "Eddie Jennings Services," rather than "Eddie Jennings Services, LLC" (yes, Eddie Jennings Services comma).
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@eddiejennings said in Forming an LLC:
I decided on Eddie Jennings Services, LLC. Now I get to contact the Secretary of State's office (Georgia) on Tuesday, since (despite being less than 80 characters and me typing it 100% correctly on the web page) my confirmation E-mail for my name reservation reads "Eddie Jennings Services," rather than "Eddie Jennings Services, LLC" (yes, Eddie Jennings Services comma).
I'm not the only one with an injection attack radar yelling loudly in my head am I?
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@travisdh1 said in Forming an LLC:
@eddiejennings said in Forming an LLC:
I decided on Eddie Jennings Services, LLC. Now I get to contact the Secretary of State's office (Georgia) on Tuesday, since (despite being less than 80 characters and me typing it 100% correctly on the web page) my confirmation E-mail for my name reservation reads "Eddie Jennings Services," rather than "Eddie Jennings Services, LLC" (yes, Eddie Jennings Services comma).
I'm not the only one with an injection attack radar yelling loudly in my head am I?
I completed their "Report a Problem" form. Oh well. This will get solved one way or another. I simply wasn't expecting the name reservation process to be as much of a source of stress.
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A LLC is, historically, newer form of business entity, which for tax purposes can elect to be taxed as many different ways. If a single member, by default it will be taxed as a disregarded entity (sole proprietorship). If multiple members, by default a partnership, or if elected, a S-corp or C-corp. While being a state entity, a LLC is not a corporation, but has many similar liability statutory protections, just like a corporation, but generally has less of the formalities as a corporation. If naming has conflicts, in most states you can do a nontaxable reorganization to change names, etc.
