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LLC FAQ

Discussion in 'Ebay' started by toml3030, May 27, 2016.

  1. toml3030

    toml3030 Elite Member

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    First, some myths

    a. LLC does not save you taxes, in fact it will cost you more
    b. LLC does not give you anonymity to anyone who really really want to track you down. You can be tracked down by signing for the corporation by filing for business license or opening a bank account or entering into a contract like signing a lease.
    c. Using an out of state LLC does not protect you from your state's laws or taxes since you must register as an out of state corporation in your state to legally do business

    1. What is an LLC?

    LLC stands for Limited Liability Company. What that means is that for accounting purposes, LLC is like another person, even if it's 100% owned by you. LLC is basically a combination of pass through taxes of a personal ownership (the owners of LLC are 100% responsible for income taxes on profits) and limited liability of a corporation. (your personal assets are not seized in a bankruptcy when your corporation goes bankrupt)

    2. What are the advantages of an LLC?

    a. pass through taxation - you can file profits of an LLC under your personal taxes so you don't have to file separate corporate taxes
    b. asset protection - as stated above for accounting purposes LLC is a separate person, so if you keep your finances separate, they have to sue you separately to seize an LLC's assets
    c. no residency requirement - you do not need to reside in US or be a legal resident of US to be an owne of LLC
    d. LLC can choose to be taxed as a sole proprietorship, a partnership, or a corporation.
    e. LLC's can own other LLC's

    3. What are the disadvantages of an LLC?

    a. you can not issue stock and get investment this way
    b. self employment tax
    c. since multiparty LLC's are considered partnerships, you have less control over what happens compared to a S corporation. If more than 50% of the LLC is sold, it is considered automatically dissolved, etc.
    d. you must keep separate accounting for the LLC since co-mingling your personal assets with that of an LLC will cause you to lose legal protection. If anyone can prove in court that LLC's assets are same as your personal assets they can grab it.
    e. LLC's may be taxed by the state. In my state it is $850/year.
    f. LLC does not save you taxes, like many people think because no matter where your LLC is incorporated, you must register as a foreign corporation in any state it has physical presence in. For example, if you own a Nevada corporation but your registered address is in California, you will most likely have to register in California as a foreign corporation and pay California taxes.

    4. Why use LLC's for stealth?

    Since LLC's are considered a separate entity than you for tax purposes you can get a separate tax ID for the LLC and make accounts under the LLC. Unless you do something shady or start moving $5K a day through paypal, you should not have problems.

    5. Are LLC's safe to use for stealth accounts?

    In general yes. If someone wanted to spend a few thousand dollars' worth of labor to find who the owner of an LLC is, they probably could. The whole point of stealth is that you want to act in a way that no one goes out of their way to spend a few thousand dollars to investigate you. I have not heard of eBay doing it, but if you do a million dollars a year on Amazon, I have heard of them doing deep investigation of you to make sure that you're someone who can be trusted. Also when your account grow to a certain size, around $5K to $20K a month paypal or Amazon Pay will eventually do risk assessment where they may ask for the owner's SS#.

    6. What state LLC's are favored?

    Delaware - most popular for corporations because its business laws are very management friendly. This is why you see many large corporations incorporate here. No real advantages for a small operation.
    Nevada - no corporate income tax, no franchise tax, does not share info with IRS, no annual fees, minimal reporting requirements, but must have a live business license with personal guarantee by owner so you can be tracked down this way
    Wyoming - no corporate income tax, minimal reporting requirements, best privacy protection since you don't even need to report to the state who the owners are
     
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  2. mastergunt

    mastergunt Newbie

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    I search a lot here about LLC. What do you think is the best option to start a LLC as non-us citizen. A lot of scam out there. I found this service for example uslegalforms.com, legalzoom.com. I need some background info about them or other company that offer LLC creation. Any advice from a more experience user in this field?!

    Thanks for the info.
     
  3. toml3030

    toml3030 Elite Member

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    These companies just fill out the paperwork and file with the state. That's all they do. All you need to do to create an LLC is to file the paperwork and pay a fee, as well as having a registered agent for your company in the state that you file.