View Full Version : Becoming a Limited Liability Company...
09-29-2007, 06:52 AM
A friend wants to set up an LLC, probably alone, perhaps with her mother- to provide housecleaning services, perhaps even to sell items, create a by-subscription newsletter, etc.?
I've found plenty of Internet information about how to do it, but I'd like to hear
stories from those who have done it about what it entailed, how it went, what other options she might consider, etc.- Thanks.
09-29-2007, 07:14 AM
Depending on the situation, you might consider an S-Corp. It is a bit more paperwork but can have some tax benefits in some situations (since you fill out a corporate return vs a schedule C).
legalzoom.com is a good resource but not really a subsitute for a lawyer/accoutant. If you are close to a state line, you may want to look at the pros/cons of say Ohio vs Indiana for example.
In Georgia, the legal process can take about an hour of actual do-it-yourself work*. First you reserve your intended name (such as Widgets LLC), then mail your Articles of Organization which is typically about two short paragraphs. You'll get back your recorded Articles in about a week. Cost is about $75.
In the past, a number of states did not allow single-owner LLCs, but I think by now nearly every state allows them (check your state's rules). Tax-wise, the IRS treats single-owner LLCs as sole proprietorships and multiple-owner LLCs as parternships, unless you elect otherwise. Some people assert that multiple-owner LLCs give more bullet-proof liability protection, since it is easier to "pierce the veil" of a single-owner LLC (whether that is a point of law, or simply that single-owner LLCs tend to co-mingle personal and company assets more frequently, I don't know).
*The real work is in determining who will be owners in your LLC, and if there are multiple active owners (especially if they are not spouses), what the Bylaws will contain. If you and your (soon-to-be-former) friend start an LLC, before you file you should draw up explicit Bylaws that cover the basics (ownership percentages, expectation of work, etc). These aren't typically filed (at least not in Georgia), but are important to avoid misunderstandings.
I am not an attorney, accountant, or tax expert.
09-29-2007, 08:41 PM
Her state is Idaho, btw.
I'll google up the S-corp.
Thanks, everyone! Any other advice?
09-29-2007, 10:17 PM
I would talk to an accountant about which form will be best for tax reasons. That being said, an LLC is easy enough to form. Here (http://www.idsos.state.id.us/corp/llcform.htm) is a link to the state's website for the necessary form.
If there are multiple members, you may want to look into an operating agreement to work out issues of ownership and what happens if some leaves etc.
09-29-2007, 10:32 PM
Nolo LLC Basics (http://www.nolo.com/article.cfm/objectID/D7043E4E-91CB-4B29-B8DC0DDA10AD4B3B/111/182/245/ART/)
09-30-2007, 12:36 AM
I have had an LLC in NYState for 8 years and an LLC in Oregon for 6 months.
NY was somewhat costly to maintain ($500 a year) and extremely costly (~$2000) to set up. And that was all for the fees and publishing costs; no lawyers involved.
The biggest advantage of the LLC, IMO, is that the paperwork is quite easy (both at the start and ongoing). I'm a fan. My former business partner (he had to start a new business because I moved out of NY and closed down the old LLC) went with an S-Corp for his business. He also seems happy with that. Frankly, I think the differences are probably minor for the majority of small businesses.
09-30-2007, 06:37 AM
My accountant, in PA, was against it. She said the tax laws were too grey for LLCs. She recommended an S-Corp. This was 8 years ago.
09-30-2007, 07:30 AM
It will probably be a one-person operation. I'm reading the Idaho LLC statute (whew!) and the Nolo info. I'd like to hear more personal experiences. Thanks.
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