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Business License vs LLC

Discussion in 'Legal Issues' started by dscurlock, Mar 27, 2015.

  1. #1
    I know a Business Lic pretty much tells the state that you are planning to
    do business as....and LLC seems far more complicated....

    When I did a search, it appears the name that I was searching
    was somewhat popular, and I will use a fictitious name as example:

    Business Licenses:
    5 searches found on Premier Foods
    (So 5 different people have the same
    name operating under the same name?)
    (Most if not all the names are closed or inactive)

    and it sounds confusing to have multiple
    business using the same business name.

    LLC
    1 search found on Premier Foods
    (LLC filed in my own state)
    (LLC is not active)

    I am not really sure what to do....
    Do I file business lic and hope the LLC is still
    inactive in the future so it can be gotten.

    Why do I need a Business License over having LLC?

    What do you guys think?
     
    dscurlock, Mar 27, 2015 IP
  2. kjh-08

    kjh-08 Well-Known Member

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    #2
    I formed a LLC myself. I searched the Secretary of state (Of my state) business feature. My name was used as an INC. but dissolved 1.5 years earlier. So there was no problem registering it, only cost $50.
    What do you mean by a business license? Sole proprietorship
    If the LLC formation has been dissolved then you can register it. LLC's are great to protect you and your assets.
     
    kjh-08, Mar 27, 2015 IP
  3. dscurlock

    dscurlock Prominent Member

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    #3
    At the very least, in order to get checks in a business name, then you need a business
    lic ie: DBA Premier Foods; simply because banks will not deposit funds into
    your personal account, unless you have a bank account for the purpose of business...
    (at least that is the way it used to work....)

    How did you register LLC for $50....
    I have been finding fees like $300
    then there is annual state fees if I am not mistaken.
    then there is agent fees if you need an agent...
     
    dscurlock, Mar 27, 2015 IP
  4. kjh-08

    kjh-08 Well-Known Member

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    #4
    Yes you'll need some kind of business formation to open a business checking account. I filled my LLC directly online. If you use sites online like "legalzoom" or something they will charge the extra fee. Then I hired an attorney to do my "minutes" and other things. I didn't need "minutes" done but it's good if you ever have a lawsuit against your business. It shows the courts your running the business legitimately and protects you. I'm listed as the agent, any legal correspondence comes to my address. Then I take it to my attorney. I file federal taxes once a year and state taxes paid monthly.
    What's your business niche? Online only or local brick and mortar?
     
    kjh-08, Mar 27, 2015 IP
  5. pmf123

    pmf123 Notable Member

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    #5
    LLC protects your personal assets, DBA doesn't
     
    pmf123, Mar 29, 2015 IP
  6. kjh-08

    kjh-08 Well-Known Member

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    #6
    Very informative post!
     
    kjh-08, Mar 29, 2015 IP
  7. jrbiz

    jrbiz Acclaimed Member

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    #7
    What I did in RI was a number of things:

    1. I registered with my town as a business (got a business license.) This was enough to allow me to open a bank account.

    2. I then went through the process of becoming an S Corp. with the state of RI. The differences between an S Corp and an LLC are minimal but my accountant (who is also my corporate attorney) thought that an S Corp would have some slight tax advantages. You also get to say "Inc." after the company name instead of "LLC".

    3. I spent much more than $300 (I forget how much) because I had him not only do the application paperwork for processing by the state, but I also needed him to do my annual reporting, annual shareholders meeting, and other such corporate tasks to maintain my incorporation.

    4. You only need an agent if you do not have a physical presence in the state that you are incorporating in. That is what the agent provides, for the most part, though some may offer additional services.

    5. Once you are incorporated, you need to get a Federal Tax ID number from the IRS. If you remain a sole proprietorship, you would then report earnings on your personal social security number.

    6. You may also need to get a "Retail License" to sell within your own state. This is to ensure that you are collecting sales taxes for the state.

    Note that there are tax penalties imposed by my state for incorporating versus remaining a sole proprietorship (e.g., minimum corporate tax required even if you lose money one year.) However, they are outweighed by the personal liability protection that a corporation offers to its owner(s). If the corporation gets sued, they cannot go after your personal assets, in most cases. If you are a sole proprietor, everything you own is up for grabs by the courts.
     
    Last edited: Apr 2, 2015
    jrbiz, Apr 2, 2015 IP
  8. jrbiz

    jrbiz Acclaimed Member

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    #8
    In the U.S., DBA simply is a legal term for "Doing Business As" and is a branding construct that can be used by a corporation or any other business type. Here, it is a "sole proprietorship" that does not protect your personal assets.
     
    jrbiz, Apr 2, 2015 IP
  9. Business Attorney

    Business Attorney Active Member

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    #9
    Although you listed this first, I assume that you got the business license AFTER you formed your entity. The first thing a business owner should do is decide the type of entity and then form the entity, since the entity should hold all licenses in its name.

    An "S Corp" is not really a separate type of entity, it is a tax election that can be made by either a corporation or a limited liability company. For state law purposes (which controls such items as governance and liability issues), even after electing S Corp status, the entity is still either a corporation or an LLC. It is true that in some cases there are tax advantages for an S Corp, but those depend on the specific facts of the business.

    State filing fees vary from a low of about $50 in some states to several hundred dollars. If you use an attorney, his fees will be additional, but at least you will be getting legal advice. If you use a filing service, they will also charge a fee, but all they do is basically put the information you give them on the state forms, which are mostly available online for free.

    Every business needs a registered agent. What you meant to say is that if you have a physical presence in the state, you or someone at your location can be the registered agent. Many companies with physical locations in a state still choose to use someone else as the registered agent, often their attorney. If the business gets sued, the sheriff typically serves the summons on the registered agent. Some businesses would prefer that someone other than their receptionist or store clerk is served the complaint.

    An LLC with a single owner is a disregarded entity for IRS purposes (unless it elects to be treated as a corporation). In that case, unless it has employees, it does not need to get a Federal tax ID number (although it is often done for convenience and to avoid giving people your social security number).

    Most states require that businesses register with the state Department of Revenue (or its equivalent) for various taxes, including collection of sales taxes.
     
    Business Attorney, Jul 2, 2015 IP
    jrbiz likes this.