Do I need professional help?
October 21, 2013 1:01 PM Subscribe
Setting up an LLC for the first time. Do I need an attorney or accountant? Or both?
I am setting up a freelance consulting business as an LLC. I have never done this before, but I understand that registering an LLC is fairly simple. I do want to make sure I'm doing everything right so I am wondering if I should meet with an accountant or a laywer. And if so, which one?
My questions would be about:
• What type of LLC I want to be.
• Filing the correct paperwork to establish the LLC.
• What kind of financial records and receipts to keep during the year.
• Understanding how to handle finances and bank accounts (LLC vs personal finance).
• Understanding the "doing business as" options (I have not decided on a company name yet).
• Possibly having someone review a contract I am signing with a larger host company that I will be affiliated with. (This may not be necessary - the contract is pretty straightforward.)
• Should I have someone do the LLC registration for me? Or do it myself?
Thanks for any advice.
I am setting up a freelance consulting business as an LLC. I have never done this before, but I understand that registering an LLC is fairly simple. I do want to make sure I'm doing everything right so I am wondering if I should meet with an accountant or a laywer. And if so, which one?
My questions would be about:
• What type of LLC I want to be.
• Filing the correct paperwork to establish the LLC.
• What kind of financial records and receipts to keep during the year.
• Understanding how to handle finances and bank accounts (LLC vs personal finance).
• Understanding the "doing business as" options (I have not decided on a company name yet).
• Possibly having someone review a contract I am signing with a larger host company that I will be affiliated with. (This may not be necessary - the contract is pretty straightforward.)
• Should I have someone do the LLC registration for me? Or do it myself?
Thanks for any advice.
Also absolutely do not do any branding before you are 100% sure you are legally allowed to do business under the name you want, which is never before the point when the state confirms the LLC is active.
posted by griphus at 1:39 PM on October 21, 2013 [2 favorites]
posted by griphus at 1:39 PM on October 21, 2013 [2 favorites]
If you already have a contract in hand, it may be very useful to talk to a lawyer to set up your LLC and review the contract. Depending on the state, lawyers have access to expediters if you need that LLC set up right now. Depending on the state, and if you are going to be the sole member, you could probably do it yourself.
This depends a lot on the state.
No matter how simple you think a contract is, there are probably implications you haven't thought of.
If this is your first business, definitely acquire the services of an accountant to help you set up your flow. It will make life so much easier having a plan for the basics as well as learning about the hidden gotchas peculiar to your state.
posted by graftole at 1:46 PM on October 21, 2013 [1 favorite]
This depends a lot on the state.
No matter how simple you think a contract is, there are probably implications you haven't thought of.
If this is your first business, definitely acquire the services of an accountant to help you set up your flow. It will make life so much easier having a plan for the basics as well as learning about the hidden gotchas peculiar to your state.
posted by graftole at 1:46 PM on October 21, 2013 [1 favorite]
Taking your bullet points one by one:
--I'm pretty sure tehre is only one type of LLC. You may be confusing this with various types of corporation (C corp, S corp, etc.). Check with an attorney.
--The paperwork is simple enough that it can be done on one's own.
--You need to keep your personal finances and your business finances separate. Separate bank accounts, etc. Speak with an accountant for advice.
--Contracts should always be reviewed by competent counsel.
--It may be worth while for you to review SBA.gov's web site. Lots of information there that can give you some pointers.
posted by dfriedman at 1:48 PM on October 21, 2013
--I'm pretty sure tehre is only one type of LLC. You may be confusing this with various types of corporation (C corp, S corp, etc.). Check with an attorney.
--The paperwork is simple enough that it can be done on one's own.
--You need to keep your personal finances and your business finances separate. Separate bank accounts, etc. Speak with an accountant for advice.
--Contracts should always be reviewed by competent counsel.
--It may be worth while for you to review SBA.gov's web site. Lots of information there that can give you some pointers.
posted by dfriedman at 1:48 PM on October 21, 2013
Depending on the state, lawyers have access to expediters if you need that LLC set up right now.
Don't mean to flood the thread, but I just really want to second this. Certain states can have your LLC ready in an hour if you're willing to pay the money. Other states have 2-3 week minimums with no expediting available.
I've lost track of how many clients I have who call me up and need something NOW NOW NOW and I have to explain that there is literally no one they can pay to speed the processing up.
posted by griphus at 1:52 PM on October 21, 2013
Don't mean to flood the thread, but I just really want to second this. Certain states can have your LLC ready in an hour if you're willing to pay the money. Other states have 2-3 week minimums with no expediting available.
I've lost track of how many clients I have who call me up and need something NOW NOW NOW and I have to explain that there is literally no one they can pay to speed the processing up.
posted by griphus at 1:52 PM on October 21, 2013
-There is only one type of non-professional LLC
-There are different ways to have your LLC taxed
-Paperwork is simple; but if you're in NYC you should use a registered agent in Albany to reduce publication costs (ignore if not in NYS)
-An LLC only provides liability protection. Anything you can deduct on your taxes as a single member LLC you can deduct as a sole proprietor. So make sure you really need to set up the LLC (again, outside of NYS this is cheaper, so usually worth doing; if you have any assets, then again, worth doing -- don't do it just because you think it's necessary from a tax perspective!!).
-If it's just you, the paperwork is really simple; if there is more than one member, or you plan to have investors, get legal advice.
-After you form it, get an EIN; then you can get a bank account (you'll need to draft an operating agreement to get the bank account most likely, there are form agreements online that you can use if it's a SMLLC, otherwise get an attorney).
-DBAs are also really simple
-Keep everything separate financially otherwise you've just wasted a bunch of money forming a legally useless entity. You--$--->LLC account---$$-->LLC expenses ~or~ LLC income--$$--->LLC account---$$---check from LLC to you ---$$--->You
The only question you really need accountant/legal advice on is the choice of entity for tax purposes. If it's just you, the easiest is the default - disregarded entity. But the specifics of your situation may indicate S corp (not likely) or C corp (really not likely) instead.
Keep in mind that if your LLC does any business outside of the state in which it is registered it may need to register in those other states.
posted by melissasaurus at 2:02 PM on October 21, 2013 [1 favorite]
-There are different ways to have your LLC taxed
-Paperwork is simple; but if you're in NYC you should use a registered agent in Albany to reduce publication costs (ignore if not in NYS)
-An LLC only provides liability protection. Anything you can deduct on your taxes as a single member LLC you can deduct as a sole proprietor. So make sure you really need to set up the LLC (again, outside of NYS this is cheaper, so usually worth doing; if you have any assets, then again, worth doing -- don't do it just because you think it's necessary from a tax perspective!!).
-If it's just you, the paperwork is really simple; if there is more than one member, or you plan to have investors, get legal advice.
-After you form it, get an EIN; then you can get a bank account (you'll need to draft an operating agreement to get the bank account most likely, there are form agreements online that you can use if it's a SMLLC, otherwise get an attorney).
-DBAs are also really simple
-Keep everything separate financially otherwise you've just wasted a bunch of money forming a legally useless entity. You--$--->LLC account---$$-->LLC expenses ~or~ LLC income--$$--->LLC account---$$---check from LLC to you ---$$--->You
The only question you really need accountant/legal advice on is the choice of entity for tax purposes. If it's just you, the easiest is the default - disregarded entity. But the specifics of your situation may indicate S corp (not likely) or C corp (really not likely) instead.
Keep in mind that if your LLC does any business outside of the state in which it is registered it may need to register in those other states.
posted by melissasaurus at 2:02 PM on October 21, 2013 [1 favorite]
This thread is closed to new comments.
What I tell most people is that they should meet with at least a business accountant to go over the details of the taxation, liability, which records to keep, etc.
As far as actually filing it, you can do it yourself, to more or less complexity depending on the state you're in. Every state has their own procedures and some are dead-simple, whereas others are almost absurdly complex and stump even me on occasion. Generally, most states' Corporations division falls under the Department of Revenue or the Secretary of State and you can find the info there. You'll also need a Federal Tax ID (EIN) to open an account under the name of the LLC.
However, many states have additional requirements that aren't spelled out and you actually have to dig for.
Doing Business As in terms of an LLC is an alternate name. As a sole proprietor you'd have a DBA if you wanted to do business as Stevens Plumbing rather than Frank Stevens. With an LLC, you can set up an LLC called Stevens Plumbing LLC, and do business under that name. If you wanted to also do HVAC and do business under Stevens HVAC, then you'd file an additional Doing Business As for that name.
posted by griphus at 1:36 PM on October 21, 2013 [2 favorites]