Author Topic: Forming an LLC  (Read 7821 times)

Offline Fish Tank

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Forming an LLC
« on: August 05, 2015, 05:02:09 PM »
Hi, I'm in the process of setting up a small business.

I will be the only employee as of now.

Is there any benefit to having an LLC over a sole proprietorship?



Offline mercaz1

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Re: Forming an LLC
« Reply #1 on: August 05, 2015, 05:35:00 PM »
Hi, I'm in the process of setting up a small business.

I will be the only employee as of now.

Is there any benefit to having an LLC over a sole proprietorship?

im no expert and i am not telling you what to do but im pretty sure that an LLC will limit your liability in case something happens as opposed to a sole proprietorship

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Re: Forming an LLC
« Reply #2 on: August 05, 2015, 05:41:26 PM »
im no expert and i am not telling you what to do but im pretty sure that an LLC will limit your liability in case something happens as opposed to a sole proprietorship
If you are the sole employee then it won't really since you are still liable for anything you did personally. If be"h you make enough it can help for taxes to have a dual member LLC with one member not active. Their income from the LLC will not be subject to self employment tax.
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Offline yesitsme

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Re: Forming an LLC
« Reply #3 on: August 05, 2015, 10:54:52 PM »
Hi, I'm in the process of setting up a small business.
I will be the only employee as of now.
Is there any benefit to having an LLC over a sole proprietorship?

Ask your Accountant what is best for you at this time,

For Ex: my accountent told me to open a  sole proprietorship and then Once/If it picks up to switch to LLC, they both have benefits and drawbacks
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Offline Aaaron

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Re: Forming an LLC
« Reply #4 on: August 05, 2015, 11:26:35 PM »
If you are the sole employee then it won't really since you are still liable for anything you did personally. If be"h you make enough it can help for taxes to have a dual member LLC with one member not active. Their income from the LLC will not be subject to self employment tax.

99% untrue. That's the exact purpose of any corporate entity; to limit liability. Even a sole-member entity. It generally won't help for taxes since any warnings will flow straight through to your personal return.

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Re: Forming an LLC
« Reply #5 on: August 06, 2015, 12:09:55 AM »
99% untrue. That's the exact purpose of any corporate entity; to limit liability. Even a sole-member entity. It generally won't help for taxes since any warnings will flow straight through to your personal return.
-1 that doesn't mean it always works.
I didn't write sole member but sole employee, but you are correct for Ann entity owning a property where the liability is not for a personal action but for a business where the liability is for an action done the member is liable for his own action regardless of the LLC. Regarding taxes, it is a pass through as self employment for an active member. For a passive member it is more like investment income since he did not do work for it. As such by making an LLC dual member with your wife who is not involved in the business the amount attributed to her would not be subject to self employment.
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Offline Dave A

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Re: Forming an LLC
« Reply #6 on: August 06, 2015, 03:48:40 PM »
-1 that doesn't mean it always works.
I didn't write sole member but sole employee, but you are correct for Ann entity owning a property where the liability is not for a personal action but for a business where the liability is for an action done the member is liable for his own action regardless of the LLC. Regarding taxes, it is a pass through as self employment for an active member. For a passive member it is more like investment income since he did not do work for it. As such by making an LLC dual member with your wife who is not involved in the business the amount attributed to her would not be subject to self employment.

How are you defining "personal action"?  If you're doing something outside the scope of your employment, then yes -- you could be held personally liable.  But it's generally best to form an LLC if you're trying to limit liability.  Really depends on the nature of the business.

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Re: Forming an LLC
« Reply #7 on: August 06, 2015, 06:08:13 PM »
How are you defining "personal action"?  If you're doing something outside the scope of your employment, then yes -- you could be held personally liable.  But it's generally best to form an LLC if you're trying to limit liability.  Really depends on the nature of the business.
Personal action is something which you did. If a Doctor has his practice as an LLC and he personally messes up on a patient he will still be personally liable since he is the one who did it. If a different Doctor who was hired messes up then the LLC protects the owner of the practice. This is a very common misconception. An LLC does not save a person from his own actions even if they are done in the course of business but will protect the owner from the actions of employees or liabilities of the property such as a slip and fall. Individuals get sued all the time for actions they did in the course of their LLCs business.
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Offline Aaaron

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Re: Forming an LLC
« Reply #8 on: August 06, 2015, 06:27:02 PM »
Personal action is something which you did. If a Doctor has his practice as an LLC and he personally messes up on a patient he will still be personally liable since he is the one who did it. If a different Doctor who was hired messes up then the LLC protects the owner of the practice. This is a very common misconception. An LLC does not save a person from his own actions even if they are done in the course of business but will protect the owner from the actions of employees or liabilities of the property such as a slip and fall. Individuals get sued all the time for actions they did in the course of their LLCs business.

In most states, what you're referring to only applies for a professional acting in his/her course of business.  But if someone is an Amazon re-seller, contractor, or pretty much any other business, an LLC will probably protect from liability.  Obviously, ask your local attorney.

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Re: Forming an LLC
« Reply #9 on: August 06, 2015, 07:07:18 PM »
As a re-seller the liability would be for damages caused by an item sold so you would be correct about that. I was unclear in my original post about the distinction which I clarified afterwards. What it really boils down to is that the LLC does not save you from youself only from others.
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Offline good sam

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Re: Forming an LLC
« Reply #10 on: August 06, 2015, 09:05:49 PM »
The protection of an llc is not for negligent acts. It's for contracts and business deals that you enter into. I don't see what the benefits are to not forming one other than the cost which is not very substantial.
« Last Edit: August 06, 2015, 09:09:18 PM by good sam »
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Offline schneury

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Re: Forming an LLC
« Reply #11 on: May 30, 2016, 06:21:08 PM »
What's the best and least expensive way/website to make an LLC?

Offline jackofall

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Re: Forming an LLC
« Reply #12 on: May 30, 2016, 06:27:42 PM »
What's the best and least expensive way/website to make an LLC?
Which state are you forming in?
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Offline schneury

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Re: Forming an LLC
« Reply #13 on: May 30, 2016, 06:30:11 PM »
I'm in NY and the business will be in IL so not sure where it would be better for the LLC to be registered

Offline jackofall

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Re: Forming an LLC
« Reply #14 on: May 30, 2016, 06:33:59 PM »
I'm in NY and the business will be in IL so not sure where it would be better for the LLC to be registered
You need to decide this before forming the entity. Speak to a qualified individual.
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Offline schneury

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Re: Forming an LLC
« Reply #15 on: May 30, 2016, 06:38:51 PM »
Any recommendations?

Offline jackofall

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Re: Forming an LLC
« Reply #16 on: May 30, 2016, 06:41:18 PM »
Any recommendations?
Try your accountant
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Offline incendia

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Re: Forming an LLC
« Reply #17 on: May 30, 2016, 08:18:07 PM »
I dont know about IL but in NY its expensive to start a LLC.

you should also check if you have to file yearly paper work and how much that is

Offline CS1

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Re: Forming an LLC
« Reply #18 on: May 30, 2016, 08:43:50 PM »
What's the best and least expensive way/website to make an LLC?

I've used BizFilings to make the LLC and you can still be a sole proprietor.
I'd assume that since the business is in IL and that most other states may cost less than NY in taxes, etc.. that it may be best to file in IL. ($70 extra fee if you have them do the state filing. They do the federal Tax-ID portion).
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Offline Entrepreneur

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Re: Forming an LLC
« Reply #19 on: July 23, 2017, 10:42:19 PM »
What are options for creating an LLC but not having my personal name on it in the beginning (besides having a family members name instead)?

Thanks