Should I form an LLC? Please help...

by TheWebGuy

Posted: 13 years ago 10 replies

INTERNET MARKETING

Hey Warriors,

I was wondering if any of you have experience forming an LLC and if you think it's worth it for someone (like myself) that is an information internet marketer?

I have a couple digital information products out there currently and they are selling well. I expect to make pretty good money this year from my products (I do this full time).

But while I realize it's smart for businesses to set up LLC if they are selling physical goods b/c of potential lawsuits....I am only selling information/ebooks and I have no customer contact besides emails.

With that being said, are there any advantages to setting up an LLC for someone in my position (tax advantages, legal advantages, etc)?

I live in Florida (where there is no state income tax also)...but my businesses sell all over the world (on the internet) so I can file in any state to form my LLC. I've heard Nevada is a good place because they have no business income tax, franchise fees, capital gains tax, state corporation tax or inheritance tax...

Would creating an LLC in Nevada lower taxes then (maybe if I reinvested profits into new internet businesses)? Not quite sure...

How much money would my internet businesses have to earn to make it worth opening up an LLC in Nevada (or any other state) from a tax perspective? ...I'm mainly interested in saving on my taxes (not necessarily the limited liability part).

Thanks for any opinions you can provide. Also, please speak freely...I will only take what you write as opinion and not as legal advice. I will seek a lawyer for actual formation and advice...but I was just wondering what you all thought since you're in the same business as me!

Thanks a lot!

#corporation #form #llc #tax #tax advice

Ralf Skirr 13 years ago

Once you do business, you are target for law suits. Even more so on the internet.

It's always a good idea to not mix private and business finances legally.

The LLC helps you to separate your business and your private live. If your business goes south, for whatever reason, you'll still be protected.

Having an LLC will not automatically have the desired effect, you need to do it right. There's a pretty good Dummies book on the subject. The author has the website myllc.com. While I'm not recommending their service, you can get some good info there.

Incorporate / Form Corporation Online: MyLLC.com, Inc.
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- kindsvater 13 years ago
  
  Originally Posted by Ralf Skirr
  
  Once you do business, you are target for law suits. Even more so on the internet.
  
  There is a common misconception in this statement I want to address.
  
  You do not need a LLC to be in business or "do business". If you are marketing online, even as a sole proprietor, you are in business.
  
  Does that make you a target of lawsuits? Maybe. (Maybe not depending on your legal terms).
  
  But the key point here is forming an LLC does not mean you are now in business. You probably already are.
  
  Additionally, forming a LLC does not necessarily shield you or protect you from liability. If you have a LLC or corporation and personally engage in wrongdoing, then you and your LLC get sued. So no protection.
  
  (I have someone today in that exact position. Thought they could hide behind a LLC and now have a lawsuit naming them and their company. Oops, now he has to pay two $400 court fees just to defend the claim, and he has to hire an attorney instead of defending himself because it is a crime called the unauthorized practice of law if he tried to represent the company. It is a real expensive lesson.)
  
  But, if you hire someone (employee or contractor) and they misbehave, then yes, your corporate entity may be exposed but not you personally
  
  .
  
  Thanks
  
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Tsnyder 13 years ago

Call your lawyer tomorrow.
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brendanglanville 13 years ago

Having had a company in Australia - there is so much that can go wrong if not set up properly. I would def get legal advice - and from someone who has proven track record.
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Warrior Ben 13 years ago

The best thing to do is go get legal advice, and you should do that right away.

Having said that, I've found that LLC's are the easiest to manage and have the most favorable tax advantages. At this point in the game, I would recommend setting up an LLC where you currently live. If you register as a Nevada or Delaware LLC, you'll still have to register it in your home state as a foreign entity. Once you start making enough money where the tax difference will really matter, you'll be able to afford an attorney and accountant to figure out the best strategy for you.

I hope this helps and best of luck in getting your business of the ground!

-Ben
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TheWebGuy 13 years ago

Thank you so much guys!

I've been doing a lot of research on LLC with S corp status and this seems to have the flexibility/protection of an LLC but the tax benefits of an S corp...

Or that's at least what I'm reading. Does anyone know what those tax benefits are? An example would be super helpful if you understand this!

Thanks guys. I really appreciate it.
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Tsnyder 13 years ago

When you're done talking to your lawyer call your CPA.
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manny2513 13 years ago

I would say that an LLC is a good idea and it varies from state to state like here in TN I got an LLC and I pay just 0.001 on taxes which is great. Now if you don't keep your personal account separate from your business account then on a law suit having an LLC might not give you protection. If you are going to open an LLC then make sure that you keep your personal finance and business finance separate so you'll cover.
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- dfs_dean 13 years ago
  
  Another reason I set up an LLC was for continuity of my business. The business holdings (AdSense, PayPal, Amazon Affiliate, etc) are all in the company name rather than being personal accounts in my name. I structured the LLC membership so there won't be a problem of the business living on even when I'm not. There should be no issues with my family continuing to receive any payments and they shouldn't have hassles with other business dealings.
  
  Of course, I don't intend for this benefit of an LLC to occur for a long, long time.
  
  But you never know.
  
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Ryan Marshall 13 years ago

Personally, I put my income under a corporation to save on taxes and keep legal matters under the corporate shield.
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