Sole proprietor or LLC? And business credit?

Carlo Pro

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Nov 10, 2013
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LLC. Hopefully it protects my home and family from any business misdeeds. Once you done an LLC, I don't believe you can mix business things and personal.

Even if you running as an sole Proprietor, you must have a different bank account so you separate your personal from the business expenses and income. When you do your taxes it will be easy also.
 

Jeffb

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Jun 25, 2014
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You can file the LLC your self through your local Secretary of State. When you use someone like Legal Zoom they charge you a high price for something you can do yourself and in only a matter of minutes.

After you set up your LLC, go to irs.org and apply for an EIN for an llc. It'll give you your number right on line. Save it to your computer and print it.

Also get your DUNS and Bradstreet number. Please don't make the mistake of paying DNB for anything. You will get a DNB number for free.

Use the EIN on your llc accounts, insurance etc.
 

Omar

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May 24, 2014
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You can file the LLC your self through your local Secretary of State. When you use someone like Legal Zoom they charge you a high price for something you can do yourself and in only a matter of minutes.

After you set up your LLC, go to irs.org and apply for an EIN for an llc. It'll give you your number right on line. Save it to your computer and print it.

Also get your DUNS and Bradstreet number. Please don't make the mistake of paying DNB for anything. You will get a DNB number for free.

Use the EIN on your llc accounts, insurance etc.
What is a dnb number?
 

John B.B.

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Wow guys! O.O

Just wanted to add a few cents here that I bet will be helpful for folks.

I've got a shelf of works on LLCs and been setting things up, including with legal advise (which the following does not in any way constitute and shall not be relied upon by any sane person as such, nor is intended as such and shall be disregarded as nonesense without you getting a lawyer). These are just *some* of the points, and I bet they'll be of interest to you:

(1) Single-member LLCs can often be disregarded.

This is because LLCs are designed to be partnership-entities. i.e. knowing what a "partnership" is with all pros and cons, liabilitie, etc. is a good place to begin understanding them.

They were designed with the understanding that people will fail to get into business if, in the event one partner is attacked legally, the business can be destroyed--often this occurred when the voting interest in a business was seized and then sold or liquidated in some way to cash-out/obtain the damages desired after winning at court against such partners in businesses.

(2) Members of LLCs need not always be natural persons.

i.e. other LLCs, corporations, and entities generally can often hold interests in LLCs beyond the people who individually hold interests.

(3) States may disregard any LLC which is found to be an alter-ego of its member or members rather than real business.

(4) Courts have explained that contrary to the popular myth, "corporate formalities are the cost ot maintain the veil of protection" (VERY close paraphrase on a ruling that accuratley summarizes its ruling in my humble but non-lawyer (so get a lawyer damn it!) opinion).

i.e. it needs to actually be run like a business, and you better checklist-follow those damn formalities for your own protection!

(5) Most people don't really take drafting and modifying the Operating Agreement (goes by other names in some states) seriously: that is fatal because in many States it is what is specified in the O.A. (and whether its provisions are followed) that actually insures you do or do not have protection under the law, and lacking the right provisions and language you basically just waste money on an LLC (or worse, get accused of trying to be shady or criminal).

(6) Lawyers can and will STILL name you even if you have an LLC in many cases, just to force you into court in hopes of forcing you to pay-up: there are measures to take to make this not worth their time but they're way beyond the scope of this topic or a forum post generally.

(7) Legalzoom seems alright but the lawyers I've known (who aren't particularly defensive about form service really at all) freak-out when they hear someone has used them and always found significant problems in their documents. ;(

(8) The way your LLC is taxed can affect the protections an LLC can potentially offer.

And it's not S-Corp v. C-Corp. Those are "taxed as corporation" and LLCs can also be taxed in other ways (such as partnerships), potentially they can even be nonprofits! Sole pro is yet another (the least favorable).

(9) Statements like "the true LLC protection from personal assets have never been fully tested." are incorrect.

LLCs are similar to corporations *if set-up properly with the proper elections* in offering protections...for true partnerships. What that is depends state to state and the legal advise and guidance are the keys here.

(10) One of the more important things I know about the protection they provide: if membership interests/shares/units (all these terms and more are used varying between states in the US) are freely transferable then the protections for the business are basically sacrificed. :(

This is one of those things done in the Operating Agreement (again, may be called something else like "Provisions") so again, means you cannot (typically) just fill-out a simple state form for $100 and be done (without expecting to lose the protections that could otherwise be available).

I've actually been slowly working-out long lists of each and every point I can find on these things (+ their sources of authority) to really put these together properly for myself, because you can never truly count on professionals to care as much as you do: too often they are just filling standard forms with little work done to collect that check from the bumpkin who doesn't know better, and mock you if you do and complain! HAHAHAHA (bastards)