Wait, what? How much for a LLC?

Originally Posted by Green Moon

Good thing, too. There are so many errors in your summary, you would probably lose your license.:rolleyes:



Neither a sole proprietor nor a business entity can deduct personal expenses. If you deduct a haircut or clothing and are caught, it will be disallowed and you will owe taxes plus penalties and interest.

Deductible business expenses, like hosting and autoresponders, are deductible whether you are a sole proprietor, an LLC or a corporation.



S corporations are not used by non-profits (and yes, "non-profit" does mean you - the owner - cannot earn a profit). An S corporation is simply a corporation that makes an election under the Internal Revenue Code to pass through its income to its shareholders. In that respect, it is similar to an LLC taxed as a partnership, but there are some key differences between an S corp and an LLC. The main difference is that an S corporation pays a salary and dividend while a LLC just makes distributions. With an S corporation, only the salary is subject to employment taxes while in an LLC all income allocated to a member is subject to employment taxes.



There are some restrictions. To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation
• Have only allowable shareholders
  • including individuals, certain trust, and estates and
  • may not include partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have one class of stock
• Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.

Assuming you meet those requirements, all you have to do is file Form 2553 with the IRS. Not too difficult or time consuming




Like a corporation, an LLC is a limited liability entity. A corporation does not offer more protection from liabilities. With both entities, there are still some risks of incurring personal liability, such as you noted for personal guarantees.



This is almost entirely wrong. Neither corporations nor LLCs have a cap on how much is protected. Major companies like Wal-Mart and Amazon are C corporations for reasons other than a higher cap. NO major business could be an S corporation for a number of reasons, the most obvious of which is the 100 shareholder limit. While many doctors and lawyers are LLCs, many are professional corporations and many are LLPs.



About the only entities that ever choose to be LLPs these days are professional practices like lawyers and accountants. Often that is the case because they have multistate practices where inconsistent state regulatory schemes make it difficult to operate under any other form. There is really no advantage to an LLP over an LLC.

If by implication you are saying that an LLC is really meant for a single owner, that too is incorrect. In fact, while all states now allow single member LLCs originally most states required that, like a partnership, an LLC needed to have 2 or more members. That has not been the case for more than a decade now, but LLCs were never intended to be ONLY a vehicle for single owners.



There is nothing wrong with single owner corporations any more than there is something wrong with single member LLCs. They are not targeted for audit by the IRS solely because of a single owner.



Courts look at a number of factors when deciding to pierce the corporate veil. While failing to follow corporate procedures is certainly one factor (and you are correct that LLCs have less formalities to follow), factors like commingling funds, failing to maintain the distinction between the owner and the business, using corporate or LLC assets for personal purposes (like paying for haircuts and clothing with corporate funds) are far more likely to trigger piercing the corporate veil.

Getting back to main thread:



In most states, the state fees for setting up an LLC are less than $200. Many are $100 or less. Here is a complete list of state LLC filing fees and LLC formation documents. Unfortunately, Massachusetts and Illinois have chosen to peg their rates at $500. Alaska (at $250) is the only other state where LLC formation costs more than $200. California has a low $70 filing fee but as another post already indicated, there is a $800 annual minimum franchise tax.

Someone can do like you, Mike, and set up a Nevada LLC or in some other state, but if they are really operating in their own state, to stay legal they will need to qualify as a foreign LLC in their own state, and the cost is usually the same as if they had filed in their own state in the first place. The result is paying your state the same amount PLUS paying a state fee and a fee to a company to serve as the LLC's registered agent.