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Is an LLC the way to go?

by z9ack
6 replies
Thanks for taking the time to help me out. I am looking for any advice on how I should setup the administration side of my IM business. I realize that each individual situation is different so I do not expect specific answers. I am more or less looking for a good general direction. I am currently working as an individual. I am making money through things like adsense, clickbank, and a few others. I am also flipping websites as well as creating and selling my own.

My question is what kind of actions should I be taking to protect myself liability wise as well as with taxes? Is an LLC the way to go or are there better options out there?

Again thanks for your time.
#llc
  • Profile picture of the author Ross Cohen
    I would form some sort of small income beforehand. Lots of people fail online, so an LLC in that case would be pointless. If revenue starts increasing steadily, it may be time to incorporate.
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  • Profile picture of the author Tim Russ
    Disclaimer: I am not a lawyer and nothing I say should be taken as legal advice.

    Now, it's my understanding that an LLC generally does limit liability for the owners but there are hundreds of years of case law for a regular corporation. There's no way in this world that one can completely avoid liability legally if someone wants to sue you. If they want you enough they'll find a way to get you.

    You need to contact a lawyer who can advise you directly about your particular situation. Asking nonlawyers is a very risky thing to do.
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    • Profile picture of the author bizsolutions
      Both resellcells and Tim are right. I am not a lawyer, either, but have a lot of experience in small business.

      First, make some money, and become confident that you can successfully continue what you are doing to make money.

      Then, contact a lawyer with experience working for small businesses, and ask which is best in your situation.

      It's true that Corporations have been used for centuries; however, if I remember right, LLC's have been used for more than 20 years now. If there had been big problems with liability with LLC's, I'm sure you would hear about it and that few businesses would use that form.

      Much will depend on the experience and ability of the lawyer you hire. A bad lawyer can screw up an LLC *OR* a Corporation, leaving you liable.

      I have owned an S-Corporation and several LLC's. I have not needed to use them for liability protection, so I cannot say how well each works for that purpose. The lawyer's fees were lower for the LLC's, but some accountants are not legally certified to work with LLC's, only Corporations and Sole Proprietorships. So if you plan to hire an accountant, maybe you should start with them, and find out what types of businesses they serve.

      Hope this is helpful.
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  • Profile picture of the author cashtree
    Yes LLC is the way to go, because the idea is it protects your personal assets if you ever get sued. Costs about $100 to register(depending on your state, lame states like New York and Cali are more, they also have further requirements that are mind numbing) .if you do yourself(which i recommend as it takes 2 minutes to fill out the form) and it's necessary to be a real business, who's taken seriously. Lot of marketers may argue this, but look at this sites too, barely any info, usually whois privacy on etc... after you setup your LLC you need to get a EIN from the IRS(social security number for your business) then setup a business bank account. You also need a registered agent for your business mail(you can be your own registered agent if you're in the same state you registered the LLC) I recommend going with a local bank, lot of the big ones want you to deposit a ton to get it open, and for that, they suck. Also be careful with mixing personal account and business account funds, as that can be seen as "piercing the corporate viel" in court, meaning the personal asset protection you get with LLC could be removed. Also definitely go with LLC over scorp, scorp is better for large companies if you know how to play the tax game(write offs etc...) if you don't you'll just be paying an arm and a leg for that, where as LLC makes more sense.
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    • Profile picture of the author Mo Sheikh
      As others have already stated, its best to ensure you are making a decent amount of income before incorporating. I'm not a lawyer, but when you do decide to incorporate in my opinion an LLC is the best option. An LLC will essentially separate your personal assets from your business assets (obviously as long as you don't mix funds or use your LLC to pay personal bills, etc). It will also help you taxwise.

      I highly suggest having an attorney complete and file the incorporation documents for you rather than doing it yourself. Its far better to discuss with an attorney and a CPA to ensure everything will be set up correctly because an LLC can be taxed several different ways each with its own pros/cons.
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  • Profile picture of the author z9ack
    Thanks Everybody...I appreciate your time and your advice.
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