Starting a Limited Liability Company?
 

Does anybody have experience with this? If so please share. I'm really interested in knowing how difficult it is, how long it takes, and what steps you took. Just checked out a few books from the library about it. Hopefully that's not overkill. Especially interested in hearing from sole proprietors.

Re: Starting a Limited Liability Company?
 

Each state has different rules. Go to your state's Secretary of State page and there should be detailed instructions there.

In Illinois, you just fill out a couple of forms, pay $500, and that's pretty much it. Couldn't get much simpler and the website walks you through the process.

Re: Starting a Limited Liability Company?
 

It's easy, just check out the state's Secretary of State page. If you don't want to deal with it, there are companies online that will do it for a fee.

Re: Starting a Limited Liability Company?
 

You may consider the advice of an accountant about this. Setting it up is not terribly difficult, but I believe there are options when choosing a tax strategy. I recently created an LLC in Nevada for real estate investing, and my accountant's advice was to have it taxed as an S-corporation. I let him do all the paperwork, and all I did was sign the forms. Process took about a month...

Re: Starting a Limited Liability Company?
 

Is there any point in having your company be an LLC if you do not plan on being in debt?

I plan on using my own money to start this company. I will not have any creditors. I want to protect my assets (and profits made from this company) from lawsuits potentially brought forth by customers. I will be selling a product. I do not want to be held liable should something negative occur to a customer as a result of product use. Do I need a certain type of insurance? If so, what kind? Or do I need to start this company as an LLC? Or both?

Re: Starting a Limited Liability Company?
 

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Is there any point in having your company be an LLC if you do not plan on being in debt?

I plan on using my own money to start this company. I will not have any creditors. I want to protect my assets (and profits made from this company) from lawsuits potentially brought forth by customers. I will be selling a product. I do not want to be held liable should something negative occur to a customer as a result of product use. Do I need a certain type of insurance? If so, what kind? Or do I need to start this company as an LLC? Or both?

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Check out legalzoom.com. I used them to start a basic LLC in Virginia and I was very satisfied. I'd really recommend that you file in the state where you will conduct your business. An LLC basically combines the tax advantages of a partnership with the legal advantages of a corporation. A win-win.

If you are a sole proprietor and get sued, they can go after all your PERSONAL assets. An LLC generally protects against that unless you don't keep your business and personal finances separate (separate bank accounts, etc.) or your product results in a personal injury due to negligence, recklessness, or intent [I'm not 100% sure about the last part, but in my understanding, it's correct].

Anyway, even if you proceed with a "do-it yourself" approach, you should at least have a lawyer look over it. I'm not a lawyer and I'm giving you this advice from personal experience. You need to do your own research to make the decision.

Also, as a sole proprietor, you can represent your business in court. If you have an LLC, you are forced to hire a lawyer to represent you.

Re: Starting a Limited Liability Company?
 

Gugel,

I'm pretty sure that as long as you don't pierce the corporate veil of your LLC (by keeping business and personal expenses separate), then you aren't personally liable in a personal injury lawsuit (although your company sure is). Again, I'm not 100% and it may vary by state, but that is my understanding.

Re: Starting a Limited Liability Company?
 

So lets say I start an LLC. Let's say I earn $100,000 in ten months. I reinvest about $30,000 in manufacturing, advertising, and website upkeep. The remaining $70,000 is pure profit which I pay to myself. If someone sues me in month eleven are they able to go after that $70,000? Say I make three million dollars in five years...2/3 of which is profit...what could someone suing the LLC potentially take?

Re: Starting a Limited Liability Company?
 

[ QUOTE ]
So lets say I start an LLC. Let's say I earn $100,000 in ten months. I reinvest about $30,000 in manufacturing, advertising, and website upkeep. The remaining $70,000 is pure profit which I pay to myself. If someone sues me in month eleven are they able to go after that $70,000? Say I make three million dollars in five years...2/3 of which is profit...what could someone suing the LLC potentially take?

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Umm... IIRC once you pay yourself, that money is now yours. They can take everything the LLC owns though.

Post deleted by Mat Sklansky
 

Re: Starting a Limited Liability Company?
 

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get a good lawyer. worth every penny.

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Unless you have particular clauses you want to include in your LLC or have multiple partners, setting up an LLC was super-easy for me without a lawyer. The Secretary of State page for your state will walk you through the process.

Also, if you get a lawyer, be sure they're not charging a bunch of money on top of the registration fee. I think I saw some legal service offering a $550 LLC formation in Illinois (the fee in Illinois is $500) so they had a 10% markup. Just do your research.

Re: Starting a Limited Liability Company?
 

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Gugel,

I'm pretty sure that as long as you don't pierce the corporate veil of your LLC (by keeping business and personal expenses separate), then you aren't personally liable in a personal injury lawsuit (although your company sure is). Again, I'm not 100% and it may vary by state, but that is my understanding.

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I'm pretty sure officers/managers can be responsible for personal injury. Let's take a gross example. You get a shipment of soy beans from your supplier in China. You test the quality and find levels of toxins that are very clearly hazardous. You're like "meh, whatever, no one cares" and decide to sell the soy beans anyway. People buy your soy beans, eat them, and die. Your corporate shield ain't protecting you.

Re: Starting a Limited Liability Company?
 

Yeah, that's malicious though. There's a major difference.

Re: Starting a Limited Liability Company?
 

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[ QUOTE ]
So lets say I start an LLC. Let's say I earn $100,000 in ten months. I reinvest about $30,000 in manufacturing, advertising, and website upkeep. The remaining $70,000 is pure profit which I pay to myself. If someone sues me in month eleven are they able to go after that $70,000? Say I make three million dollars in five years...2/3 of which is profit...what could someone suing the LLC potentially take?

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Umm... IIRC once you pay yourself, that money is now yours. They can take everything the LLC owns though.

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here's another asset protection aspect of LLCs. in florida and probably in more than a few jurisdictions, if you are sued personally and someone obtains a judgment against you, they are only entitled to what is called a charging lien. a charging lien only entitles the holder to a percentage of any cash distributions that are paid out of the LLC to the owner. in a corporation scenario, a judgment holder can petition a court to seize the owner's shares to satisfy the judgment.

i just had my law firm changed to a PL, which is the professional equivalent of an LLC, at the suggestion of an asset protection lawyer for that very reason

Re: Starting a Limited Liability Company?
 

I just talked to my CPA and he set up everything for a fee. In addition there's a yearly $50ish fee, and that's it. Then I took my little certificate to the bank, got bank accounts set up (with a copy of the minutes appointing each person to their position) and bam, you're good to go.

SUPER EASY...in washington you should be able to get the whole thing set up for $300 or less.

Re: Starting a Limited Liability Company?
 

[ QUOTE ]
Gugel,

I'm pretty sure that as long as you don't pierce the corporate veil of your LLC (by keeping business and personal expenses separate), then you aren't personally liable in a personal injury lawsuit (although your company sure is). Again, I'm not 100% and it may vary by state, but that is my understanding.

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This is 100% exactly the reason why I set one up. I don't want some drunk renter's friend doing something stupid then suing me. (basically you can set up a LLC for every property or every 3-4 or whatever you want...that way if you do lose a big lawsuit you can limit your risk to at worst losing those properties in the LLC)

However as stated elsewhere, in the case of GROSS neglegence etc. (like you KNOW the food you're selling is going to kill people etc. or you KNOW your properties have black mold and it's only a matter of time before someone dies from it) then yes, the LLC veil is deystroyed and you're going down. But that's only extreme cases.