Guys think about it some more. If you open an entity in say Nevada and you live and work in say texas, You will have to file as a foreign corporation in texas in order to do business in texas. This means that you are filing the fees twice once for nevada and once for texas.

Only use nevada or delaware if you want complete anonymity. Some of you are going to be putting yourself into a hole that you will not be able to dig out of. Read and learn the laws or hire a lawyer. This is not the place to get good advice on this type of setup. There is your interpretation and then there is the legal interpretation.

Originally Posted by aruns4

Awesome thread guys. I would like to be clear on this.

Lets say my LLC brings net profit of $40000 and I am the only the guy who runs it. So does that count as I earned as additional 40k when I file tax return in april?
I work in a full time job and all I know is my employer gives me w2 form to file my taxes.

I am on assumption here LLC's profits do not need to filed separately like Corporations.

LLCs give you OPTIONS.

When you first file an LLC, you get to choose whether to be taxed like a corporation or taxed like a partnership. A partnership has the $$ flow through directly to the personal income tax (Schedule C, I think it is). A corporation means that it can potentially be taxed twice.

But here's the thing. You always hear about how corporations are bad and get taxed twice. You never hear about the reasons WHY you might want your LLC to be treated like a corporation.

For instance, did you know there are special tax write-offs that are bigger if the LLC is treated as a corporation? Because there are some things you are not personally allowed to deduct from your personal return, but a corporation can. And there is the thing of the tax RATE. The first level of taxation is only 15%, I think. Which means the rate will be lower for the first $50,000 or so compared to the rate you get taxed on your personal return.

But accountants LOVE LLCs that are taxed as a partnership. Why? Because filling out the forms is easier. It all just flows through. Plus, sometimes you can spend money in the entity to buy things and take legitimate deductions pre-tax in the LLC that you cannot deduct personally. Like health insurance and/or medical expenses, for instance. There is a 2% rule for deductions on your personal return. In other words, you must spend more than 2% before you can deduct those expenses. But an LLC treated as a corporation that provides medical benefits can deduct those expenses from dollar one.

Another one is college expenses related to the job done for the LLC. As long as all the employees get the same benefit, the entity can pay for or reimburse for training expenses. On a personal return there's a cap, I think. Since you are in the internet marketing field, let's just say you want to go to that training summit that's coming up . . . in Kuala Lumpur. (I'm making this one up, but consider it a hypothetical example.) Travel expenses, cost of the training, a reasonable per diem, deductible expenses for the LLC. Just make sure you keep good records of the expenses. It's easier if you have a corporate credit card, or a bank account and corporate debit card with Visa or MasterCard logo so you have things clearly segregated. (If there's only ONE employee, then make sure you document how this helps you do a better job and why you had to go to THAT one because if you get audited it's an area of scrutiny for the IRS.)

And if you are starting out strapped a bit for cash in the beginning, here's a big one. Say you plan to do something and have a viable business plan and want to take on an investor. If you have an LLC, you can split up the benefits in odd numbered ways. With a corporation, you split by percentages according to ownership. So let's say you don't make that much money. But your uncle, who is a successful doctor who is getting ready to retire, is willing to invest in your company. His tax situation is drastically different than yours. He needs tax write-offs, you've got yours covered with your mortgage interest from the house you own and don't need that many. But there are many expenses that can generate write-offs. You can structure your LLC so that he gets 80% of the write-offs and you only get 20%, yet you still both share equally in the cash profits of the business 50-50. Or, if you don't need the write-offs at all, you can give him 100% of the write-offs, and you still do a 50-50 split. It's all about how you structure the LLC and the operating agreement in the beginning of the setup. This one will require guidance from professionals but is entirely legal. Using a corporation you cannot legally do the same, as the write-offs are split along the same lines with the ownership. Meaning, if you get 50% of the profits, you also get 50% of the write-offs.

By the way, I'm not an accountant, and IANAL (I am not a lawyer) either. Don't even play one on TV. So check and then double-check everything I've posted here, because I probably made a mistake or two.

But I post here anyway to get your imagination working so that you can get maximum mileage from the entity you choose to file, whenever and wherever you choose to file it.

By the way, there is a book you might want to have a look at put out by Nolo Press. I cannot remember the exact name of it, but it gives incorporating instructions for all 50 states in one book, breaks it down by state, tells you where to file, what the official website is and everything, including phone numbers to the offices where you would file. It's updated rather frequently to keep up with the filing fees as they change, so make sure you get the latest version. The author is Anthony Mancuso. He also writes a great book on forming an LLC as well. Nolo. It's a commercial site.

P.S. I'm in Texas. I've filed an entity in Texas. Texas has a unique "gotcha" that you won't see coming until it's too late if you file in another state and then try to register here. It costs $300 to incorporate a for-profit corporation here ($25 for a non-profit last time I checked). But the "gotcha" is, if you get a Nevada or Wyoming or other state entity and then bring it to Texas to register as a foreign corporation, they charge $750 to register that foreign entity. But only $300 to file a Texas corporation (I think the LLC was $200 last time I checked, it's been a while.)

P.P.S. For info on Nevada, go to SecretaryOfState. It's a BIZness site.

Originally Posted by TNphoneman

Guys think about it some more. If you open an entity in say Nevada and you live and work in say texas, You will have to file as a foreign corporation in texas in order to do business in texas. This means that you are filing the fees twice once for nevada and once for texas.

Only use nevada or delaware if you want complete anonymity. Some of you are going to be putting yourself into a hole that you will not be able to dig out of. Read and learn the laws or hire a lawyer. This is not the place to get good advice on this type of setup. There is your interpretation and then there is the legal interpretation.

Nevada doesn't give anonymity anymore. While they do when you incorporate or file the LLC, they take it away because you are also required to file a Nevada State Business license, and everything you want to keep hidden in the entity paperwork is REQUIRED on the state business license. (Those dirty ***tards!!!) There is a cap where you don't have to file it, but if you make over $22,000 a year (or plan to) you are expected to file it.

And it's a "gotcha" that a lot of people miss. If you don't file it and then get sued, it's a way for the opposing attorney to show that you have not met all the requirements of keeping a corporation as a separate legal "person" and then they can come after your personal assets and pierce the corporate (entity) veil and break the protection you counted on having.

Originally Posted by Fireboltgirl

I'm a big fan of Simon Black's ezine Sovereign Man. You can check out the style on his site. The answer to your question is there and if you are thinking along these lines at least read the free info (he makes $ by teaching people how to plant multiple flags/become permanent travellers). If you are gonna do it at least get quality advice from someone who does this for a living and it has become more important than ever if you are a US citizen - heed Wowhaxor's advice yah.

Very interesting! I will differently be looking into this...

Thank you!

I've adding some rep and a thanks for you...

I must confess, I didn't go the cheap route when I filed my first entity. It was a Nevada corporation. At the time I was in California. And guess what? There are 50 states in the US. There were 49 states that had better laws than the state I was in!

But here's what I did.

I found an expert who was not only willing to file the right stuff but was also willing to help me to understand what he did, and if there was something I didn't understand how to do or why he did it, I had him explain it to me. In detail. And he didn't mind, I paid for the privilege . . .

And then, the next time I needed to file a corporation, I filed it myself, using a different registered agent who was nowhere near as expensive but just as efficient (actually more so) than the first guy I dealt with. And with this second company, I started out by sending them the paperwork and letting them file it. But eventually I got to the point that I would make trips to Las Vegas (business trips, remember this is WORK filing these corporate papers, not a vacation! DEDUCTIBLE business trips!) and file them myself in the Nevada State building. At the time the office was on the second floor; I haven't been there in person in over 10 years, so they may have moved.

If you go to the SecretaryOfState BIZness site, they will say the office to file is in Carson City, the capitol of Nevada. But there is an expedite-only office in Las Vegas, about 5-10 minutes away by car from the Freemont Street experience of downtown Las Vegas. So I was always making these "Vegas runs" on Wednesday night, or Thursday night, depending on what I needed and how soon I had to have paperwork in my hand! And then I would stay for at least part of the weekend, heading back home either late Saturday or midday Sunday, depending on what else happened during my time there.

You're probably wondering "Why Wednesday night?" I bet. I'd get there Thursday morning. The thing is, they charge a TON of money for same day service in the Las Vegas expedite-only office (used to be $500 extra). But they would only charge a little bit more by comparison, except that it was 24 hour service. So drop off early Thursday, paperwork filed and back in hand early on Friday. A couple of times it was done before close of business Thursday, but most of the time they didn't want to let go of it for some reason! (Kind of like when you ship something Fed-Ex ground and it gets there in 2 or 3 days but you only paid for so they only promised 5-day delivery . . . the driver drives around town with your package or box on the truck for 2 or 3 days to make you wait! The Oops-truck will just deliver it early, but not those Fed-Ex guys. Long story, but we call UPS the Oops truck around my house. PM me some time and I'll tell you all about it! It involves live spiders!)

Anyway, after a while it got to the point that I had friends who were calling me up and asking me if I was going to Vegas that week. And if I was, could I please file some paperwork for them along with my own filings, they'd buy me gas for the trip or something. Back when I first started doiing this Nevada's DBAs/Fictitious Name Statements used to last forever, as in file once and done. Nowadays you have to renew them every five years (and pay a renewal fee) to keep using the same business name or somebody else can come behind you and snatch your business name away from you if you don't renew it.

But filing DBAs in Nevada, at least in Clark County, was weird. (Las Vegas is in Clark County.) In California you can check the computer and see if the name is available yourself. And if you want to, you can spend all day on the computer just searching their records to your hearts content. Not so in Las Vegas. They kept their records behind the counter where only the employees could look them up, and if you wanted to know if the name was available you had to get the employee to look it up for you. At least that's how it used to be. But what was cool was, there was no fishing expeditions allowed. And the thing was, at the time there was no line on the form you file that stated "Name" where you could print it out legibly, just a line where you sign the paperwork. So don't want anybody to figure out who is signing? Just scribble illegibly like my doctor writes my prescriptions and nobody will figure out who, only the company name was relevant to them. Not sure if they changed that or not, but it was interesting because it seemed to take privacy to a new level. But that was before they enacted that Nevada State Business License stuff. So in some cases in Nevada filing a DBA might give more privacy than incorporating or filing an LLC, unless they have changed the form somewhat. And considering it's Nevada, they may have changed the fee before they change the form!

Didn't mean to ramble on like this. Just telling you how I got to where I am as far as filing entity paperwork. Some states are more straightforward than others when it comes to filing. So make sure you look up Anthony Mancuso and get good instructions (his stuff's on Amazon too), read the book, then get expert answers before you get started so you understand not just how to fill out the paperwork but how what you are filling out will affect you. Because while you can always refile or file an amendment to fix your mistakes, when you do that you also get to pay an additional fee to the state to correct them. And some of those fees are more for amendments and corrections than it costs to file it the first time! Because what works for me and my situation just might screw you over completely by following my lead, all because you are in a totally different situation from me.

But hopefully you now have a boatload of extra questions that you can seek answers to from an expert near you.

Originally Posted by flipstyle

Great thread!

I have a question though....I already registered my LLC through my state online as well as obtained my EIN (online as well). But does every state send you some sort of physical 'certificate' via snail mail that verifies your LLC's existence? Mine never did this, and all I have are just the printouts of my online registration confirmation. I know my LLC registered successfully, as I did a search and saw it was in the state database, but was just curious about this.

Actually, some states have stopped sending out the pretty, fancy, certificates of incorporation. Nowadays they only produce the black and white, print-the-PDF-file version that is just as valid.

Nevada used to send out the fancy ones, too. But then they changed all that. That fancy paper with the pretty colors and beautiful seal costs extra money, and I guess they could have kept on doing it but then they probably would have raised the cost to file the corporation or LLC to make up for it.

When I filed in Texas I noticed that the expedite fee was so much lower than Las Vegas that I went ahead and expedited the filing. Texas sent me filings back signed by fax as well as by mail since I paid the extra fee and then also mailed the forms back to me. But they didn't look fancy or anything.

I mean, somebody's got to pay for that good looking paper with the expensive seal! Or they can just eliminate it and save the cost. Either way, you're still good as long as you show up on file in the state records.

new mexico only charges 50 dollars and a 15 day waiting period to start a LLC. If you have family in new mexico you can make them your resident agent. if not you can get one for about 120 a year

Originally Posted by Pointyhat

Nice info thanks.

You posted a crap comment in another thread too.. Trying to increase your post count I believe.

wtf that much???? all that stuff costs ~70€ here and it is one time fee, should get one when i feel like my income would be a problem, at the moment my income is not high enough to be bothered by.

Originally Posted by kirkonpolttaja

wtf that much???? all that stuff costs ~70€ here and it is one time fee, should get one when i feel like my income would be a problem, at the moment my income is not high enough to be bothered by.

Unlike America most countries from Europe do not allow foreigners to set up an LLC.

I found Bulgaria is more friendly and charges only fixed corporate 10% tax. Any one from the world can form a business over there.

Here in the UK, a LTD costs just £18 (about $30 - when done directly with companies house via the business link web site, and no registered agent needed). It's cheap and easy to do - did two last year. Setting up bank accounts can be a pain in the arse though - but that's a different story.

Anyway...

I'm going to be setting up a New Mexico LLC, in a few weeks. But I'll be doing it in a way that will get me the same privacy as that offered by the "New Mexico LLC privacy shelf company" sellers. But without the price tag, and thats without the mail forwarding address that you’ll need as well.

Warbucks did a thread where he covered his experience when setting up his New Mexico LLC with freeregisteredagent. But since then they have changed their policy (and it looks like the other company registration services have too), and you are now named as the person setting up the LLC (which is not required) - so your details show up in a search of the company.

If it goes as planed, I might start offering New Mexico LLC’s if there is interest. For those not in the US, a New Mexico LLC is a hell of a lot cheaper to setup than an IBC in one of the usual offshore jurisdictions (e.g.: the British Virgin Islands). As long as the LLC has nothing to do with the US (no operating there, no generating revenue there) there shouldn't be any problems.

And remember: I'm not a lawyer, nor do I play one on TV, or pretend to be one on the Internet...

One thing I forgot to ask was: has anyone been hit by hidden charges - as it seams the first year may be free, but as I've been checking out the available registers. It seams that some with nice initial costs end up issuing hidden charges as the year goes on after you’ve registered, potentially causing the nice cheap price to double or triple.

On the taxation + where to setup issue. Over at a asset protection forum I came across. The consensus by a few of the lawyers who regularly post there, is that for most people (especially those who have a physical presence) it's best off for them to just setup in their own state - so that they don’t have to deal with Nexus issues. Then focus on the operating agreement, have it written to gain savings and tax advantages.

There used to be a thread here on bhw, which covered how to diy your own LLC and what to wright in the operating agreement, but the info (operating agreement bits) is no longer available.

Originally Posted by savvypro

Here in the UK, a LTD costs just £18 (about $30 - when done directly with companies house via the business link web site, and no registered agent needed). It's cheap and easy to do - did two last year. Setting up bank accounts can be a pain in the arse though - but that's a different story.

Anyway...

I'm going to be setting up a New Mexico LLC, in a few weeks. But I'll be doing it in a way that will get me the same privacy as that offered by the "New Mexico LLC privacy shelf company" sellers. But without the price tag, and thats without the mail forwarding address that you’ll need as well.

Warbucks did a thread where he covered his experience when setting up his New Mexico LLC with freeregisteredagent. But since then they have changed their policy (and it looks like the other company registration services have too), and you are now named as the person setting up the LLC (which is not required) - so your details show up in a search of the company.

If it goes as planed, I might start offering New Mexico LLC’s if there is interest. For those not in the US, a New Mexico LLC is a hell of a lot cheaper to setup than an IBC in one of the usual offshore jurisdictions (e.g.: the British Virgin Islands). As long as the LLC has nothing to do with the US (no operating there, no generating revenue there) there shouldn't be any problems.

And remember: I'm not a lawyer, nor do I play one on TV, or pretend to be one on the Internet...

Do you think non resident can set up LTD plus bank account in the UK? I cannot come to the UK. Power of attorney will work?

I am neither a US or UK citizen. starting a internet business where I can provide services like web design, seo etc so no office or employees needed. Having a LLC or LTD in US or UK with bank(to process wire payments) is added advantage to my business. of course I will pay taxes where I incorporate and I am well aware of double tax treaties.

New mexico sounds a good choice but UK seems cheap.

What do you suggest?

Originally Posted by aruns4

Do you think non resident can set up LTD plus bank account in the UK? I cannot come to the UK. Power of attorney will work?

I am neither a US or UK citizen. starting a internet business where I can provide services like web design, seo etc so no office or employees needed. Having a LLC or LTD in US or UK with bank(to process wire payments) is added advantage to my business. of course I will pay taxes where I incorporate and I am well aware of double tax treaties.

New mexico sounds a good choice but UK seems cheap.

What do you suggest?

The short answer is: the problems you'll have for setting up a US company and bank account will be the same for the UK - just more so.


Long answer:

Setting up the LTD wouldn't be a problem, the bank account will require a bit more of an effort. Especially if you don't already have a personal account with the bank. All the high street banks (the ones that you can walk into with out an appointment) seam to be moving their business banking to a non face to face service. And just focusing on mass banking at the branches. Which means it takes longer to get anything done when setting up the account. And when you do need to see someone, you have to wait ages for an appointment.

The last LTD I setup took about 2 months (about 2 to 3 weeks was wasted by them sending letters instead of phoning), to get a bank account opened (and it was with the bank I personally have an account with). Everything they asked for, in terms of proof of what were going to do with the business, was completely pointless, as they wouldn't/couldn't check the validity or accuracy of what we provided. I found that out after asking them some simple pointed questions. We could have forged everything and they wouldn’t know.

They wouldn’t accept letters from government departments as proof. But they would quite happily accept a website I put up in a few minutes as proof. The could check the website so they asked me to email them a screen capture to be used as proof. Two months of this stupidity.

Anyway, for the next LTD, that I’ll be opening up for a project in the next few months - we’ll be going with HSBC.

The tax rate on profits for UK LTD's start off at 20%. So bare that in mind. However, your pay will be tax free if you spend less than 90 days in the UK per tax year. As UK tax is territory based.

....

The New Mexico LLC, is good if you can set it up correctly. However the anonymous route, could cause some issues with setting up a bank account. As you would have to rely on the organiser (registered agent) providing you with chain of ownership documents. The cheap one’s might not do it or more likely it will cost you a bit.

If your not too concerned about keeping your details off the public record or want to setup an account for the LLC. Then having yourself listed as the organiser, would make it easier if you don't want to chance it with the registered agent.


I myself have put on hold my setting up of a New Mexico LLC. While talking to a registered agent on Monday, they recommended a different state (as the LLC could be done in a lot less than 7 weeks - which seams to be the time it's currently taking to process the applications in New Mexico).

While doing a bit of digging I found that the recommended state offers Series LLC’s for a bit more than the New Mexico LLC - basically $50 more in filing fees. The minimum requirements to setup the LLC are the same (except you can state that the LLC is a series LLC). But every year you have to file a certificate and a tax return which costs $25 (with the state).

For me, these two yearly requirements are not such a big deal breaker as I don’t plan to operate the LLC in the US or in the state, nor will it generate any income as it will be a holdings company for IP, copyrights, trademarks etc.

The ability to create new cells, which are esently full fledge LLCs, for each thing I create or acquire. Without having to file for a new LLC or the cost that each bonafide LLC would set me back. Then the certificate and a tax return is worth the hassle. I just need to figure out, how to do it without causing issues.

The main caveat is, that the operating agreement will be key.

Once I get my ducks in a row, I’ll be setting up a Series LLC for a lot less then I thought it would cost. The Delaware series LLC costs that I originally saw, put me off a couple of years ago.

If any BHW member could post detailed information about how can a foreign citizen could open a US LLC and get an EIN for tax purposes or a TIN, I would appreciate it.

Please post from your experience and I am sure others will appreciate it too and benefit from your post.

Get an S-corporation instead of an LLC.

So far we have been talking about LLCs and the benefit of pass through taxation. You can get the same for S-corporations. (need to file one form with the IRS).
However, if you set up an S-corporation, you can substantially reduce your self-employment tax. SO: Get an S-corporation and pay NO self-employment tax !!!

Such an overload of information. I just want to start my LLC, get a bank account + debit card, and start my drop shipping business.

1) I live in New York. Should I register a business in Delaware because it's a corporate haven?

2) I plan on being the only employee/person in the company. How should I be taxed?

3) I plan on moving all of my personal assets (car, house, cable bill, phone bill, electric bill, etc.) under the company's name. What are some of the tax advantages of doing that?

in same situation...should I try to register my business in Delaware? What pros and cons
Thanks

I don't know about other states, but here's how it goes in florida:

1. Sunbiz.org
2. Select LLC
3. Name yourself or partner as registered agent
4. Pay the $125 fee
5. Wait 1 day and goto the IRS website and obtain EIN for free..

Total: $125

im in NYC and been a sole proprietor for 6 years already and run a cash business. I am thinking of doing an LLC, but im not sure exactly how to go about it. Or should I get a corporation? I only report 30k a year.

Any suggestions?

Originally Posted by wowhaxor

This is inaccurate. You don't have to have a registered agent that is different from yourself, you can do it yourself. I have opened a LLC twice, in two different states. One cost like $115 and the other one just under $100 for the LLC. I just went online to the state website and filled out the forms, took about 10 minutes, then paid with my credit card. Then you go to the IRS website and get your EIN in your LLC name, that takes about 5 minutes.

All you have to do now is wait for your fancy certificate to arrive in the mail.

This is really simple no need to pay $100 to some middleman for 15 minutes of filling out info that you will most likely have to fill out and give to that middleman anyways.

Maybe I'm missing something but when I went to Delaware's website (http://corp.delaware.gov/llcform09.pdf) there was no option to pay with a debit/card card. It's just a PDF document that you have to print and fill out, then you mail/fax them the form with check or money order.