ML
    • Recent
    • Categories
    • Tags
    • Popular
    • Users
    • Groups
    • Register
    • Login

    Forming an LLC

    Scheduled Pinned Locked Moved IT Careers
    freelanceincorporationllc
    63 Posts 11 Posters 10.2k Views
    Loading More Posts
    • Oldest to Newest
    • Newest to Oldest
    • Most Votes
    Reply
    • Reply as topic
    Log in to reply
    This topic has been deleted. Only users with topic management privileges can see it.
    • scottalanmillerS
      scottalanmiller @Spiral
      last edited by

      @spiral said in Forming an LLC:

      As a small single member LLC, when the LLC owner is performing all the work, the articles of organization is of limited effectiveness in minimizing exposure to personal liability. For example, many people acquire rental property in an LLC. (which is reasonable) Nonetheless, if the landlord him/herself personally fixes something in the rental property, and later, that thing breaks and hurts the tenant, the landlord is pulled into the dispute personally, along with the LLC. An insurance policy would be the greatest defense against liability in this case. Also, as a small single member LLC, any loan applied for, the bank most likely will require a personal guarantee by you as well, keeping you on the hook personally for the loan. However, the articles of organization becomes much more important when the LLC has multiple members.

      Even with multiple members, all of those things continue to apply. Loans are still guaranteed by individuals until the company is large enough to have its own credit rating.

      S 1 Reply Last reply Reply Quote 0
      • S
        Spiral @scottalanmiller
        last edited by

        @scottalanmiller

        That is correct, however, the LLC has "charging orders" in regard's to creditors in relation to other member's personal issues.

        Also, with multiple member LLC's, it is important to define what other members can do. Whether the LLC is member managed or manager managed. Define, how to add a new member, or remove a member out. Define the scope of operations. All this is to minimize exposure.

        1 Reply Last reply Reply Quote 1
        • EddieJenningsE
          EddieJennings
          last edited by

          From what I've read, the benefit of having an operating agreement for a single-member LLC is that it strengthens the documentation that you and your LLC are two distinct entities; thus, making the task of piercing the veil more difficult.

          1 Reply Last reply Reply Quote 0
          • S
            Spiral
            last edited by

            That is correct.

            "If it walks like a duck, quacks like a duck, it is a duck."

            If you form an LLC, you want to treat it accordingly on all accounts, to benefit from the entity creation. There are many benefits, such as taxation, to treating a general business like a business and not like another personal checkbook.

            However, the LLC is not a silver bullet, for general liability protection. The issue with a single member LLC is, it is difficult sometimes to separate the owner from personal liability, when the owner is personally performing services.

            When you start adding additional members to the LLC, the importance of the β€œagreement” becomes exponentially more important for many reasons.

            1 Reply Last reply Reply Quote 1
            • EddieJenningsE
              EddieJennings
              last edited by

              Application for the LLC has been submitted. I ended not up not creating a separate document for the Articles of Orgnization, as the Georgia Secretary of State Corporations Division has an online form for creating a new business. Only tricky part was making sure you do your signature as a member (owner) rather than just an organizer.

              Now I wait. πŸ™‚

              S 1 Reply Last reply Reply Quote 2
              • S
                Spiral @EddieJennings
                last edited by

                @eddiejennings

                Next order of business is to decide your income tax strategy.

                As a sole proprietor LLC you generally have 3 taxation choices:

                (These are tax elections only)

                • Disregarded entity - this is the default for a single member LLC. It is the most simple, and is filed with your personal taxes on a Sch C.

                • C-Corporation - this election will tax the LLC just as if it was incorporated at the state level, and is taxed as a distinct separate entity apart from the owner. The C-corp files its own income tax return, and pays its own tax. Can have tax benefits depending on the circumstance and corporate tax rates, however, adds layer of complexity, and introduces possible double taxation on dividends.

                • S-Corporation - this election is a simultaneous election to be taxed as if it was incorporated, and elect the S status, which allows for pass-through tax treatment. S-Corporation files its own information tax return, but the income tax effect is passed onto the owners, and tax is paid at the individual level.

                https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership

                Consult with a tax advisor, because, depending on your situation and circumstances, there may be great advantages with going with one election over the other.

                EddieJenningsE 1 Reply Last reply Reply Quote 2
                • EddieJenningsE
                  EddieJennings @Spiral
                  last edited by

                  @spiral said in Forming an LLC:

                  @eddiejennings

                  Next order of business is to decide your income tax strategy.

                  As a sole proprietor LLC you generally have 3 taxation choices:

                  (These are tax elections only)

                  • Disregarded entity - this is the default for a single member LLC. It is the most simple, and is filed with your personal taxes on a Sch C.

                  • C-Corporation - this election will tax the LLC just as if it was incorporated at the state level, and is taxed as a distinct separate entity apart from the owner. The C-corp files its own income tax return, and pays its own tax. Can have tax benefits depending on the circumstance and corporate tax rates, however, adds layer of complexity, and introduces possible double taxation on dividends.

                  • S-Corporation - this election is a simultaneous election to be taxed as if it was incorporated, and elect the S status, which allows for pass-through tax treatment. S-Corporation files its own information tax return, but the income tax effect is passed onto the owners, and tax is paid at the individual level.

                  https://www.irs.gov/businesses/small-businesses-self-employed/llc-filing-as-a-corporation-or-partnership

                  Consult with a tax advisor, because, depending on your situation and circumstances, there may be great advantages with going with one election over the other.

                  I had this conversation with my CPA already. For right now, "Disregarded entity" is the best fit for me. πŸ™‚

                  1 Reply Last reply Reply Quote 1
                  • EddieJenningsE
                    EddieJennings
                    last edited by

                    Eddie Jennings Services, LLC now exists. πŸ™‚

                    scottalanmillerS Mike DavisM ObsolesceO 3 Replies Last reply Reply Quote 2
                    • scottalanmillerS
                      scottalanmiller @EddieJennings
                      last edited by

                      @eddiejennings said in Forming an LLC:

                      Eddie Jennings Services, LLC now exists. πŸ™‚

                      Congrats

                      1 Reply Last reply Reply Quote 1
                      • Mike DavisM
                        Mike Davis @EddieJennings
                        last edited by

                        @eddiejennings Congrats!

                        1 Reply Last reply Reply Quote 0
                        • ObsolesceO
                          Obsolesce @EddieJennings
                          last edited by

                          @eddiejennings said in Forming an LLC:

                          Eddie Jennings Services, LLC now exists. πŸ™‚

                          No apostrophe?

                          "Eddie Jennings' Services, LLC"?

                          EddieJenningsE 1 Reply Last reply Reply Quote 0
                          • EddieJenningsE
                            EddieJennings @Obsolesce
                            last edited by

                            @tim_g said in Forming an LLC:

                            @eddiejennings said in Forming an LLC:

                            Eddie Jennings Services, LLC now exists. πŸ™‚

                            No apostrophe?

                            "Eddie Jennings' Services, LLC"?

                            Nope, and if I did, if I did, it would've been "Eddie Jennings's Services, LLC" = meh.

                            1 Reply Last reply Reply Quote 0
                            • 1
                            • 2
                            • 3
                            • 4
                            • 4 / 4
                            • First post
                              Last post