LLC then what?
June 22, 2013 7:12 AM Subscribe
After you've incorporated, what are the daily, monthly, and yearly behaviors and fees associated with having an LLC?
I'm going to incorporate in Delaware, I think, as a single-member LLC. That part is pretty step by step. But, what then, to be legally and financially (relatively) impeccable?
I'm going to provide products, services, and consulting for education and communications.
What is my daily, monthly, and yearly routine? How do you stay organized in a one-person gig? (Or, is there a single book that you love?)
I'm going to incorporate in Delaware, I think, as a single-member LLC. That part is pretty step by step. But, what then, to be legally and financially (relatively) impeccable?
I'm going to provide products, services, and consulting for education and communications.
What is my daily, monthly, and yearly routine? How do you stay organized in a one-person gig? (Or, is there a single book that you love?)
Speak to an attorney or an accountant. It won't cost much.
One of the most important considerations: Keep your LLC bank accounts separate from your personal accounts.
In my state, one of the advantages of the LLC format is that regular annual meetings and recordings of such meetings are not required. That may be true for Delaware. It may not.
posted by yclipse at 7:53 AM on June 22, 2013
One of the most important considerations: Keep your LLC bank accounts separate from your personal accounts.
In my state, one of the advantages of the LLC format is that regular annual meetings and recordings of such meetings are not required. That may be true for Delaware. It may not.
posted by yclipse at 7:53 AM on June 22, 2013
I'm an attorney, I'm not your attorney. Consult with a local attorney to figure out which state and type of business organization is best for you.
posted by Ironmouth at 8:39 AM on June 22, 2013
posted by Ironmouth at 8:39 AM on June 22, 2013
Delaware LLC: it's $250/year franchise tax to stay registered (except the first year). If you're late with it, add a $200 fine + interest. Plus you have to keep paying your registered agent, which for me is $100/year.
So I would say around $350/year.
posted by evariste at 9:07 AM on June 22, 2013
So I would say around $350/year.
posted by evariste at 9:07 AM on June 22, 2013
Best answer: Why did you choose to be a Delaware LLC, as opposed to [Home State] LLC, or corporation of either state? (Presuming that you are not from Delaware, of course) I understand there are reasons to do so, but if you are doing this because you have heard "its a good idea," try to find out why. If someone advised you to be a DE LLC, ask them if they know the answer to your question.
I'm in California, and foreign entities (created in other states) are required to register with the state, for the same price as a California entity. So being a DE LLC doesn't help avoid the CA $800 start up, or the annual tax. Your state, assuming you are not in DE, may be similar or wildly different.
I apologize for the non-answer, but you are asking for legal and tax advice, and it might be more efficient to talk to whomever you have already discussed these issues with. If you haven't talked with someone, I urge you to do so.
IAAL, IANYL, TINLA.
posted by China Grover at 9:19 AM on June 22, 2013 [2 favorites]
I'm in California, and foreign entities (created in other states) are required to register with the state, for the same price as a California entity. So being a DE LLC doesn't help avoid the CA $800 start up, or the annual tax. Your state, assuming you are not in DE, may be similar or wildly different.
I apologize for the non-answer, but you are asking for legal and tax advice, and it might be more efficient to talk to whomever you have already discussed these issues with. If you haven't talked with someone, I urge you to do so.
IAAL, IANYL, TINLA.
posted by China Grover at 9:19 AM on June 22, 2013 [2 favorites]
Assuming you are doing an S-corp, you will have to pay yourself a wage and do all of the paperwork and requirements for an employer. This means that you will have to pay social security, medicare and income tax withholding each month to both the federal and state governments. You will have to file a quarterly Form 941 Employer's Federal Tax Return and one also for your state. You will have to file annually a Form 940 Employers Federal Unemployment Tax return and also one for your state. You will have to annually fill out a W-2 and K-1 for yourself as an employee. You will have to fill out an S-corp tax return Form 1120S.
The question you should be asking yourself is why you are choosing to do this and whether it is necessary. There are a lot simpler ways to run a business with a fraction of the paperwork and hassle.
posted by JackFlash at 9:52 AM on June 22, 2013
The question you should be asking yourself is why you are choosing to do this and whether it is necessary. There are a lot simpler ways to run a business with a fraction of the paperwork and hassle.
posted by JackFlash at 9:52 AM on June 22, 2013
Best answer: I own and run an LLC. I second the suggestions that you speak with an attorney and an accountant. For the most part, the issues involved are not complex, but if you don't do everything correctly, you could face some penalties or additional costs sorting everything out.
posted by dfriedman at 10:22 AM on June 22, 2013
posted by dfriedman at 10:22 AM on June 22, 2013
Best answer: Please speak to an attorney and/or accountant. Your profile puts you in Pennsylvania. You will want to understand the landscape in Pennsylvania or wherever you are currently residing.
As a point of general information, an LLC is a completely different animal from an S-corp. You should discuss your specific needs with an attorney.
IAAL, IANYL, TINLA.
posted by ambrosia at 10:31 AM on June 22, 2013 [1 favorite]
As a point of general information, an LLC is a completely different animal from an S-corp. You should discuss your specific needs with an attorney.
IAAL, IANYL, TINLA.
posted by ambrosia at 10:31 AM on June 22, 2013 [1 favorite]
Best answer: I like Limited Liability Companies for Dummies. Some prep work: Decide on a unique name, preferably one with a decent domain name available.
Daily, there isn't much, except to always sign contracts and do other activities as a representative of your LLC. For example, a contract should have, under your signature line, the text "zeek321 for Zeek321 Consulting, LLC." If you have business cards, make sure they have your LLC's name. If you do LLC-related communication via e-mail, get and use a separate domain name and e-mail account for it. A separate telephone number, I've found, isn't as important unless you want to try to take a business tax deduction for the service.
On a yearly basis, make sure your books balance and file the necessary forms for your state of formation. I have a reminder set to do this at the close of my organization's fiscal year. You will need to have your taxes done, so get an accountant who can handle personal and business taxes. Most LLC organization statutes don't require a formal meeting.
That said, China Grover raises an excellent point: Why not form your LLC in your home state? Your proposed business description doesn't read like you will be accepting outside investors in any significant amount, which is the usual reason for forming a Delaware entity (well, that, and Delaware's Courts of Chancery). If you're going to be visiting clients and doing LLC-related work in your home state, your state will require you to register as a foreign entity which will be more expensive. At a minimum, your state will require your Delaware LLC to pay the same fee as any other in-state LLC. At a maximum, like Texas does, the foreign entity registration will be much higher (registering a Texas corporation: $300; registering a foreign entity in Texas: $750). Further, you'll be in a better position if something goes wrong. You can gripe to your own elected representatives, not an office in another state.
posted by fireoyster at 7:14 PM on June 22, 2013
Daily, there isn't much, except to always sign contracts and do other activities as a representative of your LLC. For example, a contract should have, under your signature line, the text "zeek321 for Zeek321 Consulting, LLC." If you have business cards, make sure they have your LLC's name. If you do LLC-related communication via e-mail, get and use a separate domain name and e-mail account for it. A separate telephone number, I've found, isn't as important unless you want to try to take a business tax deduction for the service.
On a yearly basis, make sure your books balance and file the necessary forms for your state of formation. I have a reminder set to do this at the close of my organization's fiscal year. You will need to have your taxes done, so get an accountant who can handle personal and business taxes. Most LLC organization statutes don't require a formal meeting.
That said, China Grover raises an excellent point: Why not form your LLC in your home state? Your proposed business description doesn't read like you will be accepting outside investors in any significant amount, which is the usual reason for forming a Delaware entity (well, that, and Delaware's Courts of Chancery). If you're going to be visiting clients and doing LLC-related work in your home state, your state will require you to register as a foreign entity which will be more expensive. At a minimum, your state will require your Delaware LLC to pay the same fee as any other in-state LLC. At a maximum, like Texas does, the foreign entity registration will be much higher (registering a Texas corporation: $300; registering a foreign entity in Texas: $750). Further, you'll be in a better position if something goes wrong. You can gripe to your own elected representatives, not an office in another state.
posted by fireoyster at 7:14 PM on June 22, 2013
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But initially, there's little to do. You will pay non-federal taxes in the state(s) in which you receive income. Later, down the road, you may have to be a registered foreign entity in the state in which you actually work. (Each state varies.)
But the point of incorporating in Delaware is low-fuss low-muss. Down the road, if the business is thriving, you can deal with that then. And you should have a good accountant at tax time.
(I am NOT a lawyer or an accountant, and I have done LLC management as poorly as possible, while still abiding by the law.)
posted by RJ Reynolds at 7:24 AM on June 22, 2013