Forming an LLC
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It is time for me to do this, at the very least for liability protection with my private lesson teaching and now more IT projects. Continuing to be a sole proprietor is unwise. Obviously, I'll educate myself so I understand about whatever structural requirements and tax implications accompany forming an LLC.
I'm curious to know, for those who have formed your own LLC, did you complete the filing procedures yourself, or did you seek the aid of a lawyer? If the latter, what value did the using a lawyer bring to you?
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I skipped the LLC and jumped right to a S-Corp. but that was nearly 20 years ago, so I can't recall why one over the other. We did hire an attorney to set it up for us. He made sure we dotted all the i's and crossed all the t's.
Explained the need to have separate accounts and to act like a business - use business accounts, don't try to do to much personal stuff on the company dime - have board meetings with mins, etc. These are some of the things to keep the corporate vail from being punched through.
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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.
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@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.
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@eddiejennings said in Forming an LLC:
I'm curious to know, for those who have formed your own LLC, did you complete the filing procedures yourself, or did you seek the aid of a lawyer? If the latter, what value did the using a lawyer bring to you?
For an LLC, do it yourself or use LegalZoom. No law firm needed.
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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 files taxes. S-Corp is very unique.
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@scottalanmiller said in Forming an LLC:
@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 files taxes. S-Corp is very unique.
Aww - OK - well then, that's definitely the reason we went with an S-Corp then.
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I have a meeting setup with my CPA for next week to talk about LLC and S-corp concerning taxation.
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I am curious as to what @Minion-Queen's opinion would be, as a business owner.
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For personal financial protection purposes there is more as an S corp than an LLC. That is the biggest reason honestly.
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More opinions the better.
For clarity the scope of this business is all of my projects (teaching, freelance stuff) outside of my 9-5. -
@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?
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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.
