I have an online site that pretty much offer it's services for free. But I am kind of worried about liability issues. I already have a terms of service and privacy policy.
TonyP, It never hurts to incorporate when there are questions of protecting yourself- legally. I would find a good reputable lawyer in your area and ask for a free consultation. If they won't do a free consultation, then move on. You should consider a legal entity if your intent is to make money. If that is not your intent, then the IRS will shut your entity down and call it a "hobby", which is not allowable for legal corporate entity status. Having a legal entity is a great way to protect assets, get good tax breaks, and help the economy. Good luck!
Its easy to show intent to make money. Just put up some adsense banners and right there is evidence of said intent.
I guess that answered the question because I am already using Adsense on my website. I was trying to avoid having to deal the paperwork of an L.L.C., but it is the liability issues I am more worried about. I was looking into getting some business cards made, but I should I wait until AFTER I form the L.L.C?
In most states doing an LLC requires the least amount of paperwork possible. If you are going to do an LLC I'd wait to get the business cards printed until you at least decide on a name. If you were ever audited for some reason, showing that you have business cards with the name of the LLC printed on it will help you defend the position that you were indeed operating as a business. In many states the cost of creating an LLC is greater than the cost of some of the other forms of incorporation. In particular Delaware charges a higher fee each year for LLC than for a small corporation. You might consider looking into an S Corp. It will give you most of the advantages of the LLC with a lower cost per year. The trade off is that you have to do slightly more paperwork and if you are hiring someone else to do it for you, the LLC could actually work out to be cheaper.
I created an LLC four years ago and I am very happy that I did so. I used LegalZoom to create the paperwork and I manage the business side of things from my end. Since I work for myself full time, the LLC angle is best for me. There are several tax advantages and the paperwork is not onerous. Even part timers may want to consider an LLC if just from a legal standpoint -- if you get sued they can only come after your business assets not your personal assets.
Someone explain how the taxes for a delaware LLC work. Supposing you make say 20k in one year and its done through the LLC. You pay corporate taxes on the LLC income but is that 20k yours to go in your bank or do you have to pay personal income taxes on it one more time? Also what about FICA? You don't pay that 15% as part of the corporate tax on the LLC right? Because it isn't really a person? I'm confused.
After 5 years of losses, your business is considered a hobby. However, your tax status and your entity classification are two different things.
A LLC is not a corporation. With a LLC you get pass-thru taxation, which is better than a corp's double taxation. You will pay tax on your income once.
LLC is a corporation Limited Liability Corporation. you're right that the taxes different depending on the type of legal entity you exist as, though. S-Corps can actually have advantages though. I suggest getting advice from both a lawyer and a CPA to see what's best for you.
It's Limited Liability COMPANY and no it's not a corporation. The LLC is a hybrid company. It was created to be like a corporation, but not a corporation.
wow, strange. apparently the acronym's used for both corporation and company, though company's correct. a lot of information about LLC on government websites are still under "incorporation" sections though. really weird.
One issue that people are not making clear is that each state has their own laws for LLC's. In Califoirnia the LLC laws, are part of the Corporation Code. In CA, the LLC gets to elect how it is to be treated for taxes: like a partnership (pass through) or like a corporation. Also, in California, there is a minimum tax of $800 per year for LLC's, regardless of income made. Lastly, having an LLC or coproration is not a shield against lawsuits. If you co-mingle LLC money with your personal money, or do not adequately fund your LLC or Corp, you can be held personally liable anyway. Consult with an attorney and/or accuntant for advice on your particular needs and goals.
As a CPA I can also throw in that courts can also "pierce the corporate veil" if you don't run the entity like a business. You'll need a minutes book, annual (at least) shareholder meetings, separate bank accounts, general tidyness in your records, etc. Anything that shows you don't treat the entitiy as a separate business can open you up to personal lawsuits. Best to get all of that stuff straightened out with the lawyers and CPAs (the CPAs who are up on legal and tax matters which I'm not I hate that kind of stuff.) jh
You can learn a lot about an L.L.C. by visiting Nolo's site and reading an article about this type of business set up. For the record: I do not pay social security taxes. My "wages" are actually "disbursements" from the company's checking account.
You'll usually get the best tax benefits by creating several corporate structures that own each other in various ways. (Just as a point of trivia, IKEA has about 200 corporate entities.) You can arrange ownership in order to minimize tax liability, to preserve ownership in case of a lawsuit, and to maintain control. An LLC is a decent place to start if you don't want to spend the time learning about all the different corporate structures, but you'll get a lot more benefit by investing some time learning about corporations. The Nolo books are good, so is the Rich Dad guide to creating corporations. I'd also suggest the Corporations For Dummies book. None of these are particularly a difficult read and you can probably find some of them at your library. The IRS site is a good resource, but it make more sense once you've read a few books on the subject.
What if you dont have meetings for minutes to put into the minutes book, and what if you dont have shareholders to hold meetings with? What if it's just a one-man show? I'm also considering creating an LLC, mostly for liablity reasons, but I too am sooo confused..
I imagine you hold a meeting with yourself and write down what was said I'm sure if you search for LLC you can find plenty of info. Also, most state's webpages have a Business section where they provide countless resources for people/companies looking to do business in that state.