Hey guys! I’m working on setting up a business, and I’m getting to the formation of the LLC part - has anybody done this before / does anybody have any advice?
Thanks!
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Following the thread. I would also like to know.
I have one setup, but my accountant does most of the work. He did my LLC paperwork for free when I setup my business with him. He said it’s super simple, just need to check the right boxes on the form. But part of the LLC setup is how do you want to do your LLC?
Do you want to have a business name (Which is simply filing a DBA with the state) or do you actually want an LLC with the matching protections? If so, you need to at least have an accountant to do your books. It only starts making sense to do that when you have $75k/yr in revenue. If you want me to send you the info for my accountant, send me a DM.
Incorporating an LLC is straightforward, and something you can do yourself if you don’t mind the work.
If you want to do it the easy way, I’ve used and would recommend Stripe Atlas. They do online incorporation for $500, and there a ton of free credits for online services included. I used them for a C corp, but they do LLC as well.
My main advice would be to hold off on incorporating until you either 1) need the liability protection 2) have people working with you who own a % of the company or 3) your company is producing decent revenue and you need a corporate entity for tax reasons
This exactly. This is the advice I was given when I spoke to my lawyer friend about creating an LLC when my Etsy shop started to get decent sales. The thing is that an LLC is really neither necessary nor sufficient to achieve what most people thinks it does. You don’t need an LLC to get an EIN which allows you to buy materials from wholesalers and avoid sales tax. You don’t need an LLC to file a schedule C to write off your business expenses from your taxes. As the owner and operator of the business, you are still personally liable for any negligence you or your employees perform which causes harm to your customers or the public, even with an LLC. The only real protection an LLC affords is to non-operating partners. It can enable some tax shenanigans if you have multiple people involved too, and it creates an entity which can jointly own things like equipment. It’s not something worth worrying about unless and until your business is actually making any money.
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Gratitude.
Good advice.
Do it when you’re making money.
Cash flow is important so preserve your cash.
The way it was explained to me is that LLC’s limit the financial liability to the assets of the company. In other words weather you make $$$ or $$$$$$ if you get sued they can not go after your personal assets (house, bank accounts). I was also told that the best state to set ut up was Nevada but did not look into why, I believe is because is free. As far as I know you do not need an accountat and in TX you can do it online. Last year the cost was $300. If you decide not to do it, you do need a sales license in TX is very easy to do just have to keep up with your quarterly reports and sale tax payments (unless you hire an accountant). The EIN you can do online and is instant as long as you have a company name that is not already on the system. Good luck and congrats!
It doesn’t limit your liability if you’re found to be negligent
What House is saying is exactly what I was told.
It’s pretty easy to set up an LLC in Texas. DO NOT use a service or website, other than the State of Texas website. The online services simply mirror the Texas site, and have you enter what you would on the Texas site, then charge an extra fee. For doing nothing.
You’re looking at a few hundred dollars, tops, to form an LLC. If you don’t have a lot of assets, you may not need a lot of protection. If you’re retired or will be retiring, you may have personal assets that you want to protect. So it’s not simply about the size of the business.
If you are interested in an LLC from the liability standpoint, you will need a business bank account. You may want a business credit card. Blue Vine provides a debit/charge card, which can work. You do need to make a deposit when you set the amount up. If you constantly mix your personal and business funds, you reduce the protection that an LLC might provide. Keep them separate. If you do use an accountant, that makes it easier on them on April. You too, for that matter.
I set up a free business bank account with Blue Vine. And I set up a business Venmo attached to my personal profile. I can switch between them based on the transaction, letting business and personal separate. Then transfer the appropriate Venmo to the appropriate bank account.
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