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How soon should I form a LLC?

Discussion in 'Business & Tax Advice' started by stateofmarket, Jan 28, 2017.

  1. stateofmarket

    stateofmarket Newbie

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    So I did affiliate marketing like 5 years ago, was pretty good at it, but then my degree and job took over. Well I'm back with plenty of seed money and making this my full time job. My question is can I just go ahead and work as an individual for a while as I sort out my tax options or do I have to take care of that asap?

    Obviously it's highway robbery if I don't form something like a LLC (i'm in california so already being robbed ha). Not asking for how to do it, or what's better, I plan to read through the threads on this forum. My question is just whether it has to be a priority of mine right now or if I can put it off.
     
  2. Jason Bradbury

    Jason Bradbury Power Member

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    You can just be a sole trader
     
  3. KraftyKyle

    KraftyKyle Jr. Executive VIP Jr. VIP Premium Member

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    I'm guessing your seed money is just from family and friends as I can't imagine any investor giving money without having set up a company. You definitely need to formally set that up ASAP. Then get a company bank account and keep expenses separate from your personal. Easiest way to do it.
     
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  4. stateofmarket

    stateofmarket Newbie

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    Yea the money is strictly my own, roughly 100k.
     
  5. Aehs01

    Aehs01 Jr. VIP Jr. VIP

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    I've been trying to decide on this myself, just owning an LLC runs $500 annually for filing fees but obviously there are tax benefits to running a business. Might be worth asking an accountant based on your income and such.
     
  6. Zwielicht

    Zwielicht Moderator Staff Member Moderator Jr. VIP

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    Over here in California, the LLC tax is $800. This doesn't even include the filing fees ($90 total), local business licenses ($10+; depending on your income and whether or not the business has already been established), permits ($70+), resident agent ($40+/year), self employment taxes, federal taxes, or state taxes.

    It's really not too bad as long as your business is making at least 5 figures annually.
     
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  7. Sherbert Hoover

    Sherbert Hoover Jr. Executive VIP Jr. VIP

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    As @Zwielicht wrote at the same time, there's a lot of extra costs/taxes associated with formation of an LLC. But if you have 100k in seed money and a solid income, it'd be worth the additional costs not only for the tax benefits in the long run, but also the limitation of liability to only those things owned by the corporation.
     
  8. switchblade

    switchblade Registered Member

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    From both a tax angle & a liability angle , operating an LLC will in the long run be more advantageous than operating as a sole trader. So do it ASAP!