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Inc vs LLC vs Local

Discussion in 'Business & Tax Advice' started by camhabib, Mar 9, 2009.

  1. camhabib

    camhabib Newbie

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    Interested in starting a business to perform all of my online endeavors under. As I understand it, I have three options: corporation, LLC, and registration of a business on a local level.

    Local filing would allow me to obtain an EIN, which is my main goal. An LLC would offer additional protection, with a little loss in flexibility (purpose and intent need to be listed in filing), and a long wait time (~20 days according to LegalZoom - want to get this off the ground asap). A corporation would do all of the above, with the possibility of public offerings, adding a huge amount of complexity to the situation.

    A full incorporation may be a bit much, as I'm not planning on going public any time soon, meaning it's between an LLC and a local filling. My state wants ~$600 just to file an LLC, meaning it'll cost me around $900 when all is said an done. A local listing is something like $25, not a deal breaker.

    Are the benefits of an LLC worth the increased yearly and filing fee? I understand that it'll all be worth it the second you get sued, but how likely is it to have a lawsuit brought against you for damages (LLC obviously not protect you from criminal charges)? What have you and others you know done? Suggestions / comments?
     
  2. dada2008

    dada2008 Junior Member Premium Member

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    One thing to be aware of is when you just get a dba (local filing) & get an ein, you are operating as a sole proprietor. You are only allowed to get 1 personal ein ever. So if you mess that one up in some way, the only way to get another ein would be to get an llc or corporation. If you are not planning to have a physical location or apply for a resale permit (to buy wholesale goods) then you probably don't need to file the llc or corp in your own state. You could go with delaware, which means more protection of your privacy. I will be getting a series llc, you may want to look more into that. It allows for several eins under one umbrella.
     
  3. camhabib

    camhabib Newbie

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    dada, thanks a lot for the reply. Is it possible to file in Delaware without being a resident or operating in that state? If so, how, and can this be done through a site such as LegalZoom or are there better ones (faster would be preferable)?
     
  4. dada2008

    dada2008 Junior Member Premium Member

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    you can just take your pick on the internet. you don't have to be there at all, you will have to pay for a registered agent in that state, it's usually included in the package for the first year or so. i'm planning on using incnow.
     
  5. camhabib

    camhabib Newbie

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    Thanks again dada. Any input from others?
     
  6. innocent

    innocent Junior Member

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    I'm a big fan of corporations given the flexibility they offer. My advice would be for an S Corp for tax purposes but an LLC would be fine too. Don't be concerned with stating the nature of your business, it's simply "Internet Marketing." Most people in the real world have no idea what that is anyway. Good luck!!
     
  7. liquidrage

    liquidrage Junior Member

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    Occupation:
    What's that???
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    Have you thought about incorporating in a different state? Several states allow homebase corporations (without an actual home base) Google search Info on incorporating in Nevada. You will find Nevada Florida and New hampshire are very lax on incorporation (much cheaper also) I would go with LLC it's a simpler form. I would not pay over $300 (If you do...make sure they use lubrication and protection)

    Side note: It is extremely difficult to file a suit against a Nevada corporation.

    If this helped ......Thank ya boy Rage
     
  8. JonesersRX7

    JonesersRX7 Regular Member

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    Nevada corporations are the biggest farce. I will not argue the point here but go read "Lawyers Are Liars" and then research and verify for yourself.

    In regards to taxation. If you plan on making a decent amount of income < 15K than get an S-Corp as the salary/dividend split allows you to eliminate SE tax.

    Bottom line, if you are going to be in business for yourself... go start interviewing CPA's and not the Seasonal H&R Block rep at your local strip mall. This is your money on the line, take the time to learn what's the best option for your business and your money.

    And if you did not know this.. setup a separate account for your income even if you decide not to opt for any asset/liability protection. Just remember as small business owners the goal is to turn a profit > spend as much as possible in write offs > then pay tax on what's left over.

    Jonesers

    Edit: Forget taxes for a moment. In this litigious society I would setup SOME type of entity - LLC or S-Corp. Having your personal assets at risk just isn't worth it. Imagine getting sued and then have them come after your house, your savings..... For the filling fee and yearly maintenance holy smokes it just doesn't make sense NOT too. And don't buy this internet anonmity crap - you eff with the wrong person and they find the right lawyer - it can and will happen.
     
    Last edited: Mar 28, 2009