Do I need LLC or Corporation to market a product?

14 years ago

Probably depends on your state laws. In my state you don't need anything, but LLC can help protect you if you think you need some protection from potential liability.

Thanks
1 reply

Signature

Need more organic search traffic? SideBacon SEO Agency is a leading provider of Fort Myers SEO services to local businesses.

{{ DiscussionBoard.errors[2722601].message }}

Will Compton

14 years ago

For taxation purposes, an LLC is a pass through entity, wheras a Corporation is taxed on profits, before you pay yourself, and then taxes are taken from your paycheck...

And Unless you are taking out big loans, or you have a business partner do you really need a taxable entity to limit liability?

Why not just a sole proprietorship, where you take the responsibility for all losses?

Thanks
2 replies

{{ DiscussionBoard.errors[2722645].message }}

wenzel777

14 years ago

Originally Posted by Will Compton

For taxation purposes, an LLC is a pass through entity, wheras a Corporation is taxed on profits, before you pay yourself, and then taxes are taken from your paycheck...

And Unless you are taking out big loans, or you have a business partner do you really need a taxable entity to limit liability?

Why not just a sole proprietorship, where you take the responsibility for all losses?

I agree. Sole proprietorship is the way to go. Also, (and please correct me if I'm wrong,) but you don't need to set anything up w/ a sole proprietorship. You'll need to report earnings if there are any, but you won't need to send any documents initially to Uncle Sam when starting up.

Thanks

{{ DiscussionBoard.errors[2722660].message }}

Gary King

14 years ago

Originally Posted by Will Compton

Why not just a sole proprietorship, where you take the responsibility for all losses?

Um, because...

You take all the responsibility for all losses.

If you are a sole proprietor doing business and someone sues you, they can take your house, your car, etc.

If you are some form of corporate entity, they can (in theory) only take your business assets, not your personal property.

Anyone can sue anyone for anything - don't like the color of someone's shirt? Sue 'em.

I'm not a proponent of legal action, but at least in the States, we've seemed to go over the top on it.

The last thing you need as a business owner is someone coming after your personal assets if there's a problem.

In many states, forming an LLC is as simple as a letter to the Secretary of State's office or a short form.

Generally, the income from an LLC is passed directly through to the owner's 1040 tax form in a Schedule C attachment. The LLC entity is basically "disregarded" for tax purposes (i.e., doesn't file its own complete return) but it provides some protection for you in legal issues.

Seek appropriate legal council, but it should be relatively affordable due to its simplicity.

[ 2 ] Thanks
2 replies

Signature

===========================

OFFLINERS! Warning: Unless You Know These Pricing Secrets, You are Leaving THOUSANDS on the Table. Get Your Free Report Now.

{{ DiscussionBoard.errors[2722685].message }}

kindsvater

14 years ago

Gary, your advice is well intended but wrong, wrong, wrong.

Having a corporation does not provide a liability shield if you do something wrong.

I've posted about this numerous times over the years:

The FTC will sue you and your business.

Any competent attorney will sue you and your business.

For most Warriors there is no possible shield. For example, if you have a sole proprietorship and run a fraudulent WSO you have personal liability.

If you incorporate and run the same fraudulent WSO now you have personal and corporate liability.

Ironically, since the corporate stock is a personal asset by suing you personally someone is in a position to simply take your corporation: including all your websites, mailing lists, products, etc.

Here is where incorporating provides a shield: when you are not involved in the wrongdoing.

For example, the owners of Target have no personal liability if someone drops a drink and there is then a slip and fall accident. That is because they have no personal involvement.

And, naturally, same problem exists with an LLC.

I'm not saying there are not good reasons to incorporate or have a LLC, but make sure you are incorporating for the right reasons and not because you think you are protecting your assets.

.

Thanks
2 replies

Signature

Use Elf Links to Stop Google's Affiliate Bans - Brian Kindsvater IM Help

{{ DiscussionBoard.errors[2722711].message }}

Gary King

14 years ago

Originally Posted by kindsvater

Gary, your advice is well intended but wrong, wrong, wrong.

Having a corporation does not provide a liability shield if you do something wrong.

I've posted about this numerous times over the years:

The FTC will sue you and your business.

Any competent attorney will sue you and your business.

For most Warriors there is no possible shield. For example, if you have a sole proprietorship and run a fraudulent WSO you have personal liability.

If you incorporate and run the same fraudulent WSO now you have personal and corporate liability.

Ironically, since the corporate stock is a personal asset by suing you personally someone is in a position to simply take your corporation: including all your websites, mailing lists, products, etc.

Here is where incorporating provides a shield: when you are not involved in the wrongdoing.

For example, the owners of Target have no personal liability if someone drops a drink and there is then a slip and fall accident. That is because they have no personal involvement.

And, naturally, same problem exists with an LLC.

I'm not saying there are not good reasons to incorporate or have a LLC, but make sure you are incorporating for the right reasons and not because you think you are protecting your assets.

.

Well, your title says lawyer and mine doesn't.

That said, I intended to imply you could conduct fraud and be protected. If that's the way it came across, I'll edit my post.

I also said anyone can sue anyone for anything.

Your information is certainly valuable as well. I'm not discrediting that in any way.

If personal asset protection is NOT a reason to form an LLC or incorporate, perhaps you would share the reasons you allude to? I'm sure everyone here could benefit from your experience, yes?

Thanks,

Gary

Thanks
1 reply

Signature

===========================

OFFLINERS! Warning: Unless You Know These Pricing Secrets, You are Leaving THOUSANDS on the Table. Get Your Free Report Now.

{{ DiscussionBoard.errors[2722788].message }}

rkcc4

13 years ago

Originally Posted by Gary King

Well, your title says lawyer and mine doesn't.

That said, I intended to imply you could conduct fraud and be protected. If that's the way it came across, I'll edit my post.

I also said anyone can sue anyone for anything.

Your information is certainly valuable as well. I'm not discrediting that in any way.

If personal asset protection is NOT a reason to form an LLC or incorporate, perhaps you would share the reasons you allude to? I'm sure everyone here could benefit from your experience, yes?

Thanks,

Gary

Lawyers or not the words LLC mean limited liability, personally I think you start with an LLC then migrate IP to offshore and/or trust.

I guess it depends on what the OP is scared of, but your original post was spot on for most people.

There is of course insurance.

Thanks
1 reply

{{ DiscussionBoard.errors[3219633].message }}

CDarklock

13 years ago

Originally Posted by rkcc4

Lawyers or not the words LLC mean limited liability

Limiting your liability with an LLC or corporation only really works if there are enough layers of insulation between you and the people doing the work to demonstrate that you could not reasonably have been expected to know what was happening and put a stop to it.

If your company is like mine - one person with a rotating series of independent contractors who work to that person's explicit specifications - you are no less liable than a sole proprietor, no matter how many forms you fill out or how many hoops you jump through.

So I personally don't bother to do anything beyond SP. I don't want to pay the money or fill out the forms or jump through the hoops, because even if I did it wouldn't matter anyway.

[ 2 ] Thanks
2 replies

Signature

"The Golden Town is the Golden Town no longer. They have sold their pillars for brass and their temples for money, they have made coins out of their golden doors. It is become a dark town full of trouble, there is no ease in its streets, beauty has left it and the old songs are gone." - Lord Dunsany, The Messengers

{{ DiscussionBoard.errors[3219993].message }}

DennisM

13 years ago

Originally Posted by CDarklock

Limiting your liability with an LLC or corporation only really works if there are enough layers of insulation between you and the people doing the work to demonstrate that you could not reasonably have been expected to know what was happening and put a stop to it.

If your company is like mine - one person with a rotating series of independent contractors who work to that person's explicit specifications - you are no less liable than a sole proprietor, no matter how many forms you fill out or how many hoops you jump through.

So I personally don't bother to do anything beyond SP. I don't want to pay the money or fill out the forms or jump through the hoops, because even if I did it wouldn't matter anyway.

Hi CD,

I agree in theory. I'm an S Corp. One huge advantage to a Corp or LLC is you'll be taken more seriously as a business. Sole Proprietor screams "one man band".

Now, if you're building your own name for branding SP is certainly fine but nothing beats a Corp. for credibility.

Dennis

PS: Great discussions in the TMN chats. Thanks for taking your time to share.

Thanks
1 reply

{{ DiscussionBoard.errors[3221808].message }}

capemay 13 years ago

To bump my question back up, I obtained an EIN for my LLC, even though I use it as a disregarded entity.

Do I need to list that EIN anywhere on my Schedule C?
- Thanks
{{ DiscussionBoard.errors[3225901].message }}

LB

13 years ago

Originally Posted by CDarklock

Limiting your liability with an LLC or corporation only really works if there are enough layers of insulation between you and the people doing the work to demonstrate that you could not reasonably have been expected to know what was happening and put a stop to it.

If your company is like mine - one person with a rotating series of independent contractors who work to that person's explicit specifications - you are no less liable than a sole proprietor, no matter how many forms you fill out or how many hoops you jump through.

So I personally don't bother to do anything beyond SP. I don't want to pay the money or fill out the forms or jump through the hoops, because even if I did it wouldn't matter anyway.

You're missing out on some pretty nice tax savings most likely by not incorporating.

I couldn't imagine going back to paying what I did as a SP.

Thanks

Signature

Tired of Article Marketing, Backlink Spamming and Other Crusty Old Traffic Methods?

Click Here.

{{ DiscussionBoard.errors[3895676].message }}

secrets2010

14 years ago

Originally Posted by kindsvater

Gary, your advice is well intended but wrong, wrong, wrong.

Having a corporation does not provide a liability shield if you do something wrong.

I've posted about this numerous times over the years:

The FTC will sue you and your business.

Any competent attorney will sue you and your business.

For most Warriors there is no possible shield. For example, if you have a sole proprietorship and run a fraudulent WSO you have personal liability.

If you incorporate and run the same fraudulent WSO now you have personal and corporate liability.

Ironically, since the corporate stock is a personal asset by suing you personally someone is in a position to simply take your corporation: including all your websites, mailing lists, products, etc.

Here is where incorporating provides a shield: when you are not involved in the wrongdoing.

For example, the owners of Target have no personal liability if someone drops a drink and there is then a slip and fall accident. That is because they have no personal involvement.

And, naturally, same problem exists with an LLC.

I'm not saying there are not good reasons to incorporate or have a LLC, but make sure you are incorporating for the right reasons and not because you think you are protecting your assets.

.

I'm not a lawyer but I watched a presentation from the 7 figure code seminar...I would bet that the presentation was made by a lawyer...i think his name is drew miles...

He talked about entity structuring and about how important is
to be set up in such a way that you can keep them from taking it all away.
Also I remember he said never hold any business in our own personal name..
Basically, I think he was saying that it was possible to bulletproof our assets...

Basically the rules he gave were:

separate your personal assets from your businesses

and separate your businesses from one another..

I will check that presentation again..so I can give you more details about that...

Again I'm not an attorney...that's the interpretation I got from the seminar presentation from "the 7 figure code"

Thanks

{{ DiscussionBoard.errors[2732632].message }}

capemay

13 years ago

Originally Posted by Gary King

Um, because...

Generally, the income from an LLC is passed directly through to the owner's 1040 tax form in a Schedule C attachment. The LLC entity is basically "disregarded" for tax purposes (i.e., doesn't file its own complete return) but it provides some protection for you in legal issues.

I also obtained an EIN for my LLC which I'll use as a disregarded entity on my Schedule C.

Does the EIN make any difference? Is there anything extra I have to do because of it when filing?

(I'm trying to self-educate myself as much as possible before going to my CPA)

Thanks

{{ DiscussionBoard.errors[3219582].message }}

kindsvater

14 years ago

Originally Posted by ckbank

I am just wondering if I really need LLc or a corporation to market my own product.

No. You can do it yourself.

[ 1 ] Thanks

Signature

Use Elf Links to Stop Google's Affiliate Bans - Brian Kindsvater IM Help

{{ DiscussionBoard.errors[2722670].message }}

soulboy01

14 years ago

while i agree with the previous poster, i do think that the level of legal protection that the corporation has to offer is much more desirable over the sole proprietorship. there are ways you can setup your corporate entities to make it more difficult to seize your assets. while i'm not a lawyer, so i'm not going to go into what those strategies might be, but there are certain inherent protections that the corporation does provide as far as legal liability. that's what it was designed to do...it really comes down to who owns whose assets. if you are not the owner of any of the company's assets, there's nothing to take. but as kindsvater mentioned, if you are intentionally committing fraud or breaking the law, you better believe that corporate veil will be pierced in a heartbeat.

Thanks
1 reply

{{ DiscussionBoard.errors[2722795].message }}

kindsvater 14 years ago

Gary:

Some thoughts come to mind ...

One reason could be taxes. Sometimes it is better to be a sole proprietor for expense deductions and sometimes a corporation is better. A CPA is the best to talk about this, but keep in mind this is not an all or nothing proposition. You can have both. I do.

A person may want the appearance of a corporation.

A person may want a 2nd PayPal account.

And, of course, the liability issue. For some Warriors with employees, etc., this can be important. The key is knowing that incorporating is not a magic shield, and understanding why can help one make an intelligent decision about whether they want to incorporate or not.
- Thanks
Signature
Use Elf Links to Stop Google's Affiliate Bans - Brian Kindsvater IM Help
{{ DiscussionBoard.errors[2722814].message }}

Amy Carczak

14 years ago

Listen to the lawyer ...he's correct on this.

You're better off with a good umbrella insurance
policy as it can provide better assistance than
hiding behind a corp ...it simply will not help you.

Thanks
1 reply

{{ DiscussionBoard.errors[2722811].message }}

CDarklock 14 years ago

Originally Posted by Amy Carczak

Listen to the lawyer ...he's correct on this.

Do not meddle in the affairs of lawyers, for they are subtle and play golf with the judge.
- [ 1 ] Thanks
Signature

"The Golden Town is the Golden Town no longer. They have sold their pillars for brass and their temples for money, they have made coins out of their golden doors. It is become a dark town full of trouble, there is no ease in its streets, beauty has left it and the old songs are gone." - Lord Dunsany, The Messengers
{{ DiscussionBoard.errors[2723157].message }}

Lori Kelly

13 years ago

When starting a new business, I usually start out as a sole proprietor to determine if it will be profitable. Self employed persons pay a 15.3% self employment tax. That is one disadvantage to being a sole proprietor. Self employed people are also the subject of more IRS audits, than a corporation or LLC.

Another reason to form a formal entity is to create a vehicle to take advantage of retirement accounts, contributing pretax dollars to the retirement account.

Piercing the corporate veil can be and is done often. There is also the possibility that if you are a one person corporation/LLC and you get sued, the attorney can use a reverse-type attempt to pierce your corporate veil, and it can be determined that you are the alter ego of the business and therefore, subject to personal liability.

I am not an attorney.

It is a good idea to talk to an attorney and a CPA before making the decision to form a formal entity.

Thanks
1 reply

Signature

Learn Website Tips, How to Do Keyword Research, & How to Write Killer Content.
Stop Wasting Time.
Start Living Your Dream.
Click Here NOW to Get Your Hands on
One of the Most Valuable Ebooks Ever!

{{ DiscussionBoard.errors[3895423].message }}

jahangir 13 years ago

Can anybody please explain the following;

1. What is LLC?
2. Is it possible to open it in USA while residing in other country?
3. Can it be opened and operated virtually/remotely?

Please...........
- Thanks
{{ DiscussionBoard.errors[3895655].message }}

pmbrent

13 years ago

Those entities are setup to protect your patents (if any) as well as for tax purposes. If you are ever sued it also adds a layer of protection for that as well.

Thanks

{{ DiscussionBoard.errors[3895698].message }}

Blaine Moore

13 years ago

Personally, on the advice of my lawyer, I went with an LLC structure to help protect my assets. "Piercing the corporate veil" can still be done, but it's one step in helping to protect yourself. If you do something illegal or fraudulent, it won't help you, but it can help from a lawsuit from a nutter at least (think McDonalds hot cup of coffee or somebody getting into an accident while listening to a CD you sold them while they're driving.)

I'd talk to your CPA or lawyer and get their advice as they'll know best what your situation is like and what your local state's laws are like. (I am not a lawyer.)

Thanks

{{ DiscussionBoard.errors[3895728].message }}

edakehurst

13 years ago

I would check with your accountant. Based on the nature of my business, I get many additional tax benefits from my entity structure. That may or may not be true for you. That would be something to discuss with your CPA.

Thanks

Signature

Free Internet Marketing Tools

Get More Exposure in Google - free report

{{ DiscussionBoard.errors[3895762].message }}

JamesGw

13 years ago

I'm not a lawyer, but I believe corporations and LLCs are more for liability issues. You don't need them to market anything. That said, certain areas are requiring a business license to sell products online in that state (or from it, I forget.)

Thanks

Signature

Brazilian Jiu-Jitsu Techniques | Precision SEO

{{ DiscussionBoard.errors[3895976].message }}

Do I need LLC or Corporation to market a product?

Trending Topics

How did you turn it all around?

Any thoughts on golf's latest phenom...Scottie Scheffler??

What's the Best IM-Related Skill to Learn Today That Can Help in the Future?

Some interesting stats about brand comms

Infographic: How B2B marketers on LinkedIn can maximise their efforts for better audience reach