please advise on best business entity (or entities) for my situation
December 1, 2016 8:49 AM
Sorry, long. This is a bit of a complex situation of my own doing.
After quitting my job I did some consulting (writing code for Engineering companies) under my own name.
I was living in New Hampshire at the time. Eventually I formed a LLC in NH for the purpose of selling software I was developing, unrelated to the previous consulting jobs. Soon after formation I moved to Massachusetts. I did more consulting under my own name for local clients. In order to do business in Massachusetts with the LLC from NH I would have to jump through hoops and pay money, not to mention the confusing (for me) tax situation. So I kept the consulting under my name but used the company name to represent the software I was working on. I don't yet have any sales of that software so I didn't have to pay any taxes and just put the LLC as a disregarded entity when filing taxes, even though I do have a taxpayer ID for it.
Moving forward, I am not sure if selling the software will ever happen. I'd like to do business in Massachusetts as a more formal entity. I'm thinking maybe I should consolidate the software I am trying to sell and any consulting based on that platform with the consulting on unrelated issues. Not sure if there are any IP issues if I write software owned by customers and software owned by me under the same business entity.
I don't want to have to worry about paying / filing for income taxes in both NH and MA.
What's the best way to do business of software consulting and software sales in Massachusetts:
-Get permission to do business in MA with my NH LLC and do consulting under that entity as well as potentially sell the software I am developing and associated services.
-Start an new LLC (or maybe Corp) in MA and roll everything, sales and consulting, under that.
-Keep things the way they are, that is, attempt to market the software and associated services under the NH LLC, and consult on unrelated topics under my own name.
-Start yet an other LLC (or Corp) in MA just for consulting without any IP on the stuff I make, and keep the NH LLC for software sales.
-Something else.
I was living in New Hampshire at the time. Eventually I formed a LLC in NH for the purpose of selling software I was developing, unrelated to the previous consulting jobs. Soon after formation I moved to Massachusetts. I did more consulting under my own name for local clients. In order to do business in Massachusetts with the LLC from NH I would have to jump through hoops and pay money, not to mention the confusing (for me) tax situation. So I kept the consulting under my name but used the company name to represent the software I was working on. I don't yet have any sales of that software so I didn't have to pay any taxes and just put the LLC as a disregarded entity when filing taxes, even though I do have a taxpayer ID for it.
Moving forward, I am not sure if selling the software will ever happen. I'd like to do business in Massachusetts as a more formal entity. I'm thinking maybe I should consolidate the software I am trying to sell and any consulting based on that platform with the consulting on unrelated issues. Not sure if there are any IP issues if I write software owned by customers and software owned by me under the same business entity.
I don't want to have to worry about paying / filing for income taxes in both NH and MA.
What's the best way to do business of software consulting and software sales in Massachusetts:
-Get permission to do business in MA with my NH LLC and do consulting under that entity as well as potentially sell the software I am developing and associated services.
-Start an new LLC (or maybe Corp) in MA and roll everything, sales and consulting, under that.
-Keep things the way they are, that is, attempt to market the software and associated services under the NH LLC, and consult on unrelated topics under my own name.
-Start yet an other LLC (or Corp) in MA just for consulting without any IP on the stuff I make, and keep the NH LLC for software sales.
-Something else.
This sounds like a complex situation that requires legal advice. Competent attorneys generally don't give legal advice for free, and legal advice that you get for free is not often competent. Since you're running a business, you are (or hope to be) making money. Legal advice is a business expense like rent and internet access. You should purchase suitable legal advice for the same reasons that you don't just set up your office in the vestibule of someone's apartment building or dumpster-dive for your marketing materials.
posted by spacewrench at 9:18 AM on December 1, 2016
posted by spacewrench at 9:18 AM on December 1, 2016
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TINLA, but why do you think there could be IP issues here? Because besides that, why would you want to have multiple business entities to deal with?
I would want to wind up the NH LLC and form whichever entity works for you in MA, if you live and do business in MA.
posted by sparklemotion at 9:16 AM on December 1, 2016