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Old 22nd September 2011, 03:31 PM   #1
Mike2120
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Default LLC Questions Need Guidance

hello I'm new the forum I am starting my own business, and I do have equipment upkeep cost. I was told if I filed taxes as an LLC that it would help me in the long run such as business expense write offs. However here are my questions

The business is Airbrushing heres my site exhaleairbrushing.com
also I do not have a building that I work, I'm a moonlight business, and I go were needed I am the only person, and Occasionally I do have help from another company.
1. What are the pros and cons?
2. Is it too late in the tax season to do it, and claim some of my cost?
3. Is there any better options, or can someone just point me in the right direction.

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Old 23rd September 2011, 02:09 PM   #2
ChrissyBiz
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Default

Here is a recent blog I wrote about the tax implications, advantages, and disadvantages of forming an LLC. You can form it with just one member in most states, and the tax benefits make it worth the investment for protecting your personal liability: http://bit.ly/pPIgt0

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Old 23rd September 2011, 05:09 PM   #3
Mike2120
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Thanks for the post I'll read it right now =) and let you know what I think.

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Old 23rd September 2011, 05:22 PM   #4
Mike2120
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Ok it was a pretty good link, it helped me understand more of what an LLC is. However it did leave me with a few questions such as when it said

Members also have the option to not pay the profits to the members, rather reinvest it into the company. In this case, taxation as a corporation is most beneficial because income tax rates for corporations are often lower than personal income tax rates.

also I was wondering how are corporations taxed after reading this
Unless the company elects to be taxed like a corporation, they will automatically be taxed like a partnership.

Since for the moment I am alone in my business would it be a good idea for me to become an LLC?

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Old 23rd September 2011, 05:55 PM   #5
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Default My 2 Cents...

Mike,

I formed my first LLC last year. I did so for several reasons. Your own motives may be different from my own, but I'll fill you in on why I did what I did:

1.) An LLC (Limited Liability Company) simply looks more professional and shows the public that I take my business seriously.

2.) An LLC acts on its own behalf and legally separates me from my company. In other words, the LLC protects me because I am not personally liable for all business obligations. If I were a "sole proprietorship" without being an LLC, everything I own would be at risk if I were to be taken to court (house, car, savings, etc.). Under an LLC however, I am protected from such things.

3.) I can legally maintain my LLC as a single proprietor, unlike corporations which must have a "board".

4.) As an LLC, I can file my business taxes as a sole proprietor I now simply have legal protect that I did not have before.

5.) The most important reason to form any LLC is for the legal protection it offers individuals under the law.

P.S. I am not a lawyer, nor am I offering legal advice. These 5 points simply constitute my personal reasons for choosing an LLC over the risks of a sole proprietorship.

Jeff Mardis

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Old 24th September 2011, 02:15 AM   #6
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Well that is a really good reasoning behind your motive. Being sued is a scary thought and a lot of people in the world today just want to make money by doing nothing. I think an LLC is sounding more for me with more information I read. Were is a good place to form an LLC? Would I go to a tax place?

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Old 24th September 2011, 07:57 AM   #7
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Default Try LegalZOOM.com

Mike,

If you're serious about setting up your business as an LLC, I would highly recommend LegalZOOM.com as THE place to start. It's where I went to get the ball rolling. They're fast, friendly and efficient. Answers to any questions you might have about setting up your LLC, can probably be found on their website.

Hope this helps.

Jeff

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Old 25th September 2011, 09:06 AM   #8
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thanks for the link I did a little research on the site, and if you read there disclaimer, I'm not so sure they are the best company to be involved with.

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Old 26th September 2011, 05:37 AM   #9
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Quote:
Originally Posted by Mike2120 View Post
thanks for the link I did a little research on the site, and if you read there disclaimer, I'm not so sure they are the best company to be involved with.
Mike,

Of course, it's always prudent to be cautious who you choose to help set-up your LLC. I'm simply recommending LegalZOOM.com based on my personal experience with them and their proven track record of helping hundreds of thousands of small business owners launch their own LLCs. Any third-party service should be used at your own discretion.

Jeff

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Old 26th September 2011, 08:42 AM   #10
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Mike, more often than not, an LLC is the structure-of-choice for a situation such as yours.

Setting up as a corporation provides certain advantages, but usually in scenarios in which you'd have multiple owners, multiple classes of ownership, outside investors, and so on. Sounds like these advantages would be irrelevant to your case.

There's also a structure called an "S Corporation" you may hear about in your research. But again, I think the primary advantage of an S Corp vis-a-vis an LLC---the ability to extract some of the profits without self-employment tax---would also be non-applicable in your situation. (This due to an impression from your description that your biz is more labor-intensive than capital-intensive.)

In both cases---a regular corporation, or an S Corp---these advantages come at the expense of certain disadvantages. Hence, no point in incurring these disadvantages if the advantages wouldn't be available to you.

I think you'd find Jeff's point #4 as a key benefit to you of setting up as an LLC. You'd obtain the same liability-protection benefit given to corporate shareholders, while simultaneously having a very simple tax-filing arrangement. As a one-owner LLC, you'd have no separate "entity" return to file...simply include your business revenues and expenses on a Schedule C within your own personal return (i.e., as if you were a sole proprietor).

Go to your Secretary of State's website for your particular state of residence. Each state's SOS website has helpful info on LLCs, including information for handling the set-up yourself. DIY LLC setups are pretty easy, esp. for one-owner arrangements. But if after reviewing the information you have any apprehensions at all, it'd be a good idea to use a service such as LegalZoom, or rent a couple hours of an accountant's time.

Best of luck with it!

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