Is an LLC required?

by trieuphu 20 replies
Am I required to register my a business if I offer offline consulting for small businesses or can I work and make money without one?
#offline marketing #llc #required
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  • Profile picture of the author John Williamson
    No, you can be a "sole proprietor" and just do business as yourself. LLC's are only for what their name implies - 'limited liability company' - in the case of a lawsuit or something like that, the LLC separates what you personally own (house, furniture, car, etc.) from what the company owns (could be nothing) - so that your personal things can't be touched in a lawsuit. In that sense it limits your liability. For tax purposes, it is a disregarded entity unless you opt to be taxed as a corporation via the Schedule C form, but that's a different story.

    Also some wholesalers require a tax ID number which is why some LLC's are formed. Without an LLC, your tax ID is just your SSN.

    Hope this helps.
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  • Profile picture of the author kebertt
    I highly recommend an LLC. If in the unfortunate event a lawsuit comes about, everything you own is safe - only your business assets are at risk.
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  • Profile picture of the author Aaron Doud
    One thing to remember an LLC in and of itself not not protect your personal assets. There is lots of case law where an owner has been held personally accountable.

    The key is always to run your business seperate from your personal life in all ways including but not limited to finances. If the government and courts see you and your business as not seperate it will not matter if you have an LLC or not.

    Also if you are the sole employee it likely will provide little protection as they will claim you are personally responsible.

    Always consult with a lawyer on how best to limit personal liability.
    Anyone can get an LLC and they cost very little which is why the courts will at times "pierce the veil" of the LLC if the case merits it.
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  • Profile picture of the author iAmNameLess
    Talkto an accountant and a lawyer, but mostly an accountant that can help guide you in what is right for your situation. I recommend all the time to incorporate, but I'm not an accountant, and I get tax breaks that you might not benefit from yet.

    You have a couple options.... go the sole prop way, llc, s corp or c corp. I doubt you would want to go c corp....

    Anyway, do research and see what would be best for you. You can file for an EIN online to start building that separation.
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  • Profile picture of the author usainbolt
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    • Profile picture of the author bob ross
      Originally Posted by usainbolt View Post

      LLC or LLP is good
      I think LLP is only for professional services like doctors or lawyers. Don't quote me on this but I believe it is. Either way you will not want to do an LLP.

      About LLC forming companies, you might be able to form your LLC online via your state's business website much cheaper and faster. I have filed many of mine in literally minutes (ny state) and got them processed within 24 hours for $25 plus the state fee (mine is $200).
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      • Profile picture of the author DavePalermo
        Form an LLC.
        I have personally used IncFile.
        You can use whomever you choose.
        And depending on what state you live in, make sure you pay your taxes.

        An LLC is the best way to go and will lessen your tax bill and protect your assets in case some douche bag decides to sue you for stupid reasons.

        p.s. Don't fall for incorporating in Delaware or Nevada unless you live in those states.You won't need to.
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        • Profile picture of the author Aaron Doud
          Dave

          How does an LLC lower your tax bill?
          An LLC can choose to file taxes as a partnership(or sole) or as an S Corp. But in and of itself it doesn't provide any tax help. If you use it like an S Corp you would get the same benefits from an S Corp. Which is cheaper in your state varies and that is really the only consideration of LLC vs a true S Corp. It is all about your states fees and rules.

          And like i said above an LLC does not protect your assets. If you are the sole owner and sole employee of a consulting/service company you can easily be personally sued. Want protection? Get insurance like all real businesses do.

          An LLC is fine and in time all companies should grow large enough to form an LLC or other Corp form. But for people starting out they are not needed and do not provide much more protection. I think an LLC is a great idea but I don't think we should over promise people here who don't know better. The protection simply doesn't happen in the real world because judges will "pierce the veil" and consider the company and the person one and the same.

          Insurance is what protects you from law suits.
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          • Profile picture of the author iAmNameLess
            Originally Posted by DavePalermo View Post

            I do know what I am talking about, thanks.
            I understand that professional advice is worth the price but if you don't have the dough....

            I formed my LLC in 2010 and use an accountant / tax attorney.
            So once the money starts to come in, then you can afford their services.
            And trust me you will need it.
            If you don't have the money to have an accountant or an attorney, then you shouldn't even be filing that anyway. You may know what you're talking about, but when you're giving professional advice on a message board without knowing their situation or what state they're in, it isn't something you should truly give advice on. Unless you're a CPA or tax attorney licensed in his state, then I retract.
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  • Profile picture of the author Tsnyder
    There is only one right answer to your question...

    GET PROFESSIONAL ADVICE... PERIOD.

    So far in this thread you've received advice and
    opinions that could cost you far more than paying
    qualified professionals to advise you properly based
    on your personal circumstances.

    I'm certain these people mean well but they simply
    don't know what they're talking about.
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    If you knew what I know you'd be doing what I do...
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    • Profile picture of the author DavePalermo
      I do know what I am talking about, thanks.
      I understand that professional advice is worth the price but if you don't have the dough....

      I formed my LLC in 2010 and use an accountant / tax attorney.
      So once the money starts to come in, then you can afford their services.
      And trust me you will need it.
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  • Profile picture of the author trieuphu
    thanks for the responses and help my WF fam
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  • Profile picture of the author mayankgangwal
    Go for LLC as we are and as here every one is saying only your business not any personal things will be there.
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  • Profile picture of the author MichaelHiles
    I wouldn't seek legal advice on an internet forum.

    That being said, one of the most important things in ANY "offline" or other consulting is one of the least discussed here.

    There's this little thing called "E&O insurance". Errors and Omissions. This is an insurance policy that protects your business (and personal) assets in the event that you, or someone working for you (subcontractor, employee, outsourced) screws something up.

    Should your pissed off client decide to ignore your limitation of liability clause in your contract (you DO have a contract, right? And your contract DOES have a limitation of liability clause, right?) and sue you for 100 times the amount of your contract engagement, an E&O policy will cover your liability.

    Trust me, this does happen. And not because you necessarily screwed up all that badly, but because it's a way for a shyster business client to get money out of you. It's just business for some people, and unfortunately, rogue shyster clients don't run around with a neon sign flashing "I sue my vendors to get money!!"

    This E&O thingy, of course, requires an actual business entity, etc...

    So yeah, if you're doing anything relating to a client's sales, marketing, business operations, etc... you should probably consider not only an LLC, but an E&O policy.
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  • Profile picture of the author highlander11
    with llc though, who do you get to be your partner?

    A single person llc, is practicly the same as a "sole proprietor"
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    • Profile picture of the author MichaelHiles
      Originally Posted by highlander11 View Post

      with llc though, who do you get to be your partner?

      A single person llc, is practicly the same as a "sole proprietor"
      Many states permit a single member LLC.

      My wife is my partner in my own holding company.
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      • Profile picture of the author Green Moon
        Originally Posted by MichaelHiles View Post

        Many states permit a single member LLC.

        My wife is my partner in my own holding company.
        ALL states allow a single member LLC.

        There is no single right or wrong answer as to whether an individual should form an LLC or operate as a sole proprietor. For many small businesses with no employees, the benefits of an LLC may be illusory. See How Limited is Limited Liability?

        If you are going to set up an LLC and don't plan to use a lawyer or accountant to help you, then you should consider filing the paperwork directly with your state. The various companies that will set up LLCs for a fee just take your information and transfer it to a state form. The forms are really very simple in most states.

        The best advice, however, is to talk to a lawyer who can explain the advantages and disadvantages of an LLC as well as what you need to do in your state to make sure that the LLC complies with state law.
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  • Profile picture of the author hero001
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    • Profile picture of the author Lance K
      All I'm going to say is this...

      Before you decide that you're going with an LLC over an S-Corp. do your own due diligence a and sit down with a REAL FLESH & BLOOD attorney for 30 minutes or so.

      Discuss the pros and cons of
      each type of entity in regards to your specific situation
      .

      It'll be some of the best money you ever spend.
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      • Profile picture of the author John Williamson
        Originally Posted by Lance K View Post

        All I'm going to say is this...

        Before you decide that you're going with an LLC over an S-Corp. do your own due diligence a and sit down with a REAL FLESH & BLOOD attorney for 30 minutes or so.

        Discuss the pros and cons of
        each type of entity in regards to your specific situation
        .

        It'll be some of the best money you ever spend.
        You can also form an LLC and opt to be taxed as an S-Corp via the Schedule C form, which is what I do.
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