Starting a Limited Liability Company?

[rainonacongadrum]

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.

[Tupacia]

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.

[kyleb]

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.

[blackasthma]

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...

[rainonacongadrum]

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?

[Gugel]

[ QUOTE ]
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?

[/ QUOTE ]

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.

[Tupacia]

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.

[rainonacongadrum]

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?

[Thremp]

[ 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?

[/ QUOTE ]

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