LLC/Inc – How did you set up yours?

[Alex-R]

Did you set up your own LLC or did you use a service or a lawyer?

I’m wrestling with the decision if I should do the LLC myself or use a lawyer. My LLC would probably be the easiest for the lawyer to set up. I’ve done my research, I spend last few weeks reading and learning about LLC. I feel like I would make his/her job very easy. I would be the only owner/member of the LLC. It would be for online start up website dealing with digital downloadable products (no physical product).

Because of this, I think I should do it myself.

How did you do it? Did you set it up yourself, use a service or had a lawyer do it for you?

If you had to do it over again, which option would you choose? And what would you recommend a first timer to keep in mind if he does this himself?

[Freelancier]

I have several LLCs and a corporation. The lawyer set up the corporation years ago, I set up all the LLCs, because the secretary of state's offices for most states makes it simple to do (I have one in Florida and three in Georgia).

The question isn't which is easiest to set up. The question is: what do you want to accomplish with it and which is the best choice for that?

From a liability perspective, they're pretty much the same. Both provide a liability shield provided you don't run the company like it's an extension of your personal life.

From a tax and financial benefits perspective, they're VERY different and you should consult with your accountant about which way will be better for you.

[Alex-R]

Thanks for the reply Freelancier.

I'm going with LLC. I'm sorry I guess I shouldn't have included Inc in the title. I only meant to include Inc because the decision steps of going through a lawyer or online may be similar as to filing for LLC.

But to answer, I am going with LLC. I want the liability of LLC, pass-through tax and separation of me and the business while keeping it simple. I won't have shares, no stocks, I don't plan to go public. I want to remain single owner of the LLC. If that ever changes I would then see myself talking to an attorney.

Freelancier, when you set up LLC for the first time yourself was there anything you wish you knew after the process was over that you would recommend a first timer like myself to be aware of or make sure that I pay attention to (during the process and after)? Anything no matter how simple or basic you think the answer may be. I want to make sure that I got my bases covered.

Thanks

[Freelancier]

Nah, the LLC is simple. Get an EIN while you're at it.

I'm glad I did the corporation first, though, because that one is for my "cash cow" and we pay ourselves dividends with that one that we couldn't with the LLC, lowering our tax burden that way.

[huggytree]

here in WI the State of WI website lets you do a llc right on line...i think it was $100 or so...took me a few minutes of answering questions

definitely no need for a lawyer for an LLC.....an INC im not so sure about

[Alex-R]

Should I get my EIN after I file for LLC and receive my paperwork? Or can I do it at the same time?

[MakingItNow]

I'll save you some grief. I spent $2500 having a lawyer set up my first LLC. I then paid another lawyer to unwind it. I set up my second single LLC using legal zoom (yeah I know) for around $600.00. The Texas SOS Fee is somewhere around $300-$350, so not too bad.

I'm not a lawyer, so I'm just asking.... Any specific reason for a LLC over a Sole Prop?

I have a website that has sold digital downloadable goods for about three years. It's a for a niche market. Each one is $98.00. I have sold hundreds of them, no problems. A few (6%) people wanted their money back after I've sent them the material, but they were trying to rip me off. I used to just refund it no questions asked. Then I put a clause online about a money back guarantee if they fail the exam. That solved that problem. Sure some douche could sue me for anything they'd like, but so it's never even been heated. Worst case, I give them their money back.

If you products include something with wrestling (someone could get hurt trying you recommendations) I would go for the LLC.

[Alex-R]

I'm not a lawyer, so I'm just asking.... Any specific reason for a LLC over a Sole Prop?

I have a website that has sold digital downloadable goods for about three years. It's a for a niche market. Each one is $98.00. I have sold hundreds of them, no problems. A few (6%) people wanted their money back after I've sent them the material, but they were trying to rip me off. I used to just refund it no questions asked. Then I put a clause online about a money back guarantee if they fail the exam. That solved that problem. Sure some douche could sue me for anything they'd like, but so it's never even been heated. Worst case, I give them their money back.

If you products include something with wrestling (someone could get hurt trying you recommendations) I would go for the LLC.

Hey,

That's exactly what I've been doing. All of my digital download products are educational ebooks and videos using software such as Photoshop, Autodesk Maya/3dsMax. So nothing physical such as fighting/wrestling.

I've been doing this for last couple of years but all under my name without separating me or my business. I guess it was more of a hobby, but now I'm making some money where I want to make sure I have some protection and business separation. I guess that's why I went with LLC. I am doing everything by the book and "terms of use & guidelines" of the software, but I wanted to make sure if I ever got sued over anything it would separate me and not go after my personal assets. I'm in similar boat as you. I always refunded the money if someone isn't happy with the ebooks/videos, I always take down any blog images that may violate copyright. But you never know if someone might want to sue you.

Honestly I haven't thought about Sole Proprietor. I would consider it. What would I need? DBA (Fictitious Name) and EIN in order to open business bank account? That's it? Could you give me some info?

I'd love to hear anything you can share.

Thanks MIN.

[MakingItNow]

Honestly I haven't thought about Sole Proprietor. I would consider it. What would I need? DBA (Fictitious Name) and EIN in order to open business bank account? That's it? Could you give me some info?

I'd love to hear anything you can share.

Thanks MIN.

I'm not sure what state you are in, or even if it matters. I don't think it does. Here in Texas, I registered my Sole Prop (DBA if name is anything other than your legal name) with county clerk for $26.00 I think. That was sufficient to open a bank account. I chose to get an EIN (which are free I think) to keep my social security number out of the mix. If you don't get an EIN on a Sole Prop, you'll have to use you social. Check with your state regarding sales tax and do it right. State sales tax problems can be a Felony in Texas. People who think "I didn't know better" is a good criminal defense regarding state tax are wrong.

My digital downloads started as a hobby in 2011 and didn't produce much for the first year, maybe year and a half. I quit paying attention then slowly jumped to double digits monthly. I expanded my operations to the same niche different market and it hasn't produced jack in a year and a half. I'm too consumed with another business, so I pulled it down the other day. If you have time, keep pressing and never give up. Don't be shady in your tactics, Google will eventually slap you down as they have done with my competition. My competitors who think they are smarter than Google haven't stood the test of time. My 2 cents, enjoy!

[Freelancier]

You get the EIN after you get the LLC, because the EIN is in the name of the LLC. EINs are free and can be created online at the IRS web site.

Single-person LLC is better than sole prop or DBA, just because of the liability shield. Corp is better than LLC if it's making enough money that the tax breaks and benefits you can get with it are worthwhile, but the liability shield is the same.

[Alex-R]

Thanks Freelancier and MakingItNow. I appreciate the help.

I've decided to go with doing it myself and go with LLC because of additional liability shield over DBA/Sole Prop. Thank you for everyone's feedback.

[David Hunter]

I know a lawyer who did it for me. Though, the form was on the state website and I could have done it myself, it was nice having a lawyer make sure I filled it out correctly.

[Business Attorney]

Once you have weighed the factors and decided to set up a single member LLC, it is so easy to set up in most states that unless you have some special issues (highly unlikely), you should just go online and do it. A lawyer might be helpful if you are uncertain which entity to use, but to hire someone just to fill in the blanks for you doesn't make much sense unless your time is more valuable than the extra cost. And you aren't even saving that much time because you must still take the time to provide the attorney or online service with the same information you would be providing to the secretary of state.

A lawyer might also give you some personal guidance on avoiding problems with your LLC liability shield by making sure that you adequately capitalize the LLC, that you always properly identify the LLC when dealing with third parties, and that you are careful to avoid commingling your personal assets with the assets of the LLC. But you can find that guidance in plenty of places online if you spend the time looking for it.

Obviously, as soon as you introduce a second owner into the mix, there are a myriad of issues that need to be addressed, so at that point you should get professional advice. But you only need to cross that bridge when you come to it.

[Alex-R]

Initially when I started I was going to go with LegalZoom. Then after reading and researching I started to lean towards going with an attorney. Then after more research and reading and these forums I got enough information to do this myself. Especially for single owned LLC, I don't think I would do this myself if I had additional members.

Hopefully if anyone else stumbles on this question, this thread can help them decide.

Thanks David.