LLC in California

[iPenguin02]

Hello everyone, I'm interested in starting my own llc to start selling items on ebay. With hopes of eventually moving off ebay to avoid posting fees and what not.
I have been researching and lot of the resources are confusing and nolo is a little confusing to a Marine with no business experience, but I do have the dedication and motivation to make it work. I have a lot of questions to clarify before I go full force.

I understand I have to register my business with my Secretary of state office. What if the business name is taken but used in a different type of business? How do I find out what names are taken?
What are every single paper work I would need to be successful? Is there an annual fee for all the licenses I would need? I was thinking about legalzoom but I read its a lot more cost efficient to do everything on my own.

If i named myself as the registered agent would type of legal documents would i need to ensure i don't run Into any legal issues like being sued.
Since I'm not going to rent an office space should I register my business under my house address or a PO Box?

How does Tax work if I am the sole proprietor? From what I've read I file it with my normal taxes.
What happens if I do not make any money from the business in the year? Would I still have to pay for having the business open? From what I've read we have to submit our earnings every quarter what exactly does that entail?

I heard I can obtain a EIN for free is that true?

Any other advice would be greatly appreciated, Things I might need or advice on successfully running a business. Thank you and sorry for do many questions.

[Gabe]

I'll do my best to answer your questions, though I'm not an expert on any of this and this isn't legal advice...

I understand I have to register my business with my Secretary of state office. What if the business name is taken but used in a different type of business? How do I find out what names are taken?
What you're thinking of are trademarks. If a trademark is used in an unrelated business you may be able to use it (not an expert). With an LLC name, if it's taken you need to find another. It's a bit archaic, but in CA the only way to 'officially' check name availability is to mail in this form: http://www.sos.ca.gov/business/corp/pdf/naavinquiryform.pdf More info on name availability here: Name Availability - Business Entities - California Secretary of State (http://www.sos.ca.gov/business/be/name-availability.htm) You can do your own informal LLC search (which is usually good enough) here: Business Search - Business Entities - Business Programs (http://kepler.sos.ca.gov/)

What are every single paper work I would need to be successful? Is there an annual fee for all the licenses I would need? I was thinking about legalzoom but I read its a lot more cost efficient to do everything on my own.
To file you need articles of organization here: http://www.sos.ca.gov/business/llc/forms/llc-1.pdf You'll also need to file a statement of information within 90 days (if I remember correctly) of filing. You can do it yourself, it's pretty easy, just follow the directions. If I remember correctly it's $70 to form the LLC, $20 to file the statement of information, and $800/yr in annual tax (even if you generate $0 revenue). More info here: Forms, Samples and Fees - Business Entities - California Secretary of State (http://www.sos.ca.gov/business/be/forms.htm#llc)

If i named myself as the registered agent would type of legal documents would i need to ensure i don't run Into any legal issues like being sued.
Since I'm not going to rent an office space should I register my business under my house address or a PO Box?
Getting sued has nothing to do with registered agents (RA), your LLC is the entity that gets sued. Forming an LLC protects your personal assets from lawsuits in most cases.

Just use your home address. I want to say that you can't use a P.O Box, but not sure. CA changed some things with their LLC formation requirements in January 1st of this year.

How does Tax work if I am the sole proprietor? From what I've read I file it with my normal taxes.
You're a single member LLC so the IRS considers you a disregarded entity (i.e. not a corporation). You just report the income/expenses on your tax return in the appropriate area.

What happens if I do not make any money from the business in the year? Would I still have to pay for having the business open? From what I've read we have to submit our earnings every quarter what exactly does that entail?
You still pay the $800 annual tax even if you generate $0 profit...even if you net a loss.

I heard I can obtain a EIN for free is that true?
Yes: Apply for an Employer Identification Number (EIN) Online (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-%28EIN%29-Online)

Answers to all of your questions are available on Google, some easier than others, which makes me think you didn't look very hard. I don't mind answering your questions, but I am concerned that you're walking into this without the proper due diligence. If you really want it you should work harder to understand it, then just ask the hard questions you still have rather than asking if "EINs are free" when you could just google "EIN" and get the IRS page to apply for an EIN as the first result. Again, just a bit concerned.

It's expensive to form an LLC in California rather than, say, Wyoming or Nevada where there are no corporate taxes. In Wyoming there's only a $50 annual filing fee. Look into similar eBay businesses and see if that's viable. Or better yet, see if you even need an LLC for what you're doing (you don't). I recommend trying it for a while then when you actually get some assets worth protecting and you're generating some revenue consider an LLC. If you just don't want to use your name, you could look into a DBA I guess.

If you try an LLC and don't like it, that's about $1,000 down the drain just from the LLC formation and 1st year annual taxes. Tack on another $100+ if you use a service like LegalZoom.

Just think about it a bit more. Hope this helps.

[iPenguin02]

What i was planning on doing was sell items through ebay using drop shippers but some drop shippers require an EIN which i can only obtain through LLC.

Thank you for all your knowledge i tried searching through google but some of the guides don't go into depth thats why i asked.

If i were to go ahead with forming this LLC so i can obtain a EIN so far this is what i've gathered, correct me if i'm wrong or missing any information


Article of Organization (Form LLC-1) - $70
Statement of Information (Form LLC-12) - $20
EIN - Free

Annual Tax fee - $800
Tax - 8.84%

Annual report fee for Form LLC-12 - $20


Do i need to request for a name reservation? or does that come with the LLC-1?
I'm not exactly sure how the registered agent part works... Is there a form to fill out or is that apart of the LLC-1 as well?

Tax right now is my biggest problem. from my understanding it will be 8.84% of my total earnings from the LLC? or is it my overall income as of right now i work a full time job, Marine Reservist making around 36k annually.
If i were to do reselling or drop shipping how does that work on my taxes, consumers pay for the item then i order it from the warehouse does that make my earnings the left over money i profited?
I do understand that my LLC tax is due quarterly, not exactly sure how that works though meaning what forms and how to calculate my profits in this type of business

[Gabe]

What i was planning on doing was sell items through ebay using drop shippers but some drop shippers require an EIN which i can only obtain through LLC.
Wrong. Did you look at the EIN link I set you in my initial response? Here's another link to the IRS EIN website: Employer ID Numbers (EINs) (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Employer-ID-Numbers-%28EINs%29-)

Bottom line is, you don't need to be an LLC to get an EIN, you can get one as a sole proprietor. If the only reason you were forming an LLC is to get an EIN, then this might render the rest of your LLC questions irrelevant (and save you about $1,000).

The Marine Corps offers courses on starting your new business through the Navy, which I advise you take. Most of them are down near Miramar or the naval base on 32nd St. here in San Diego. They're free for active duty and I assume reservists can take them as well. Again, be more patient in your research. All of your EIN questions so far are explained on the IRS website that I linked to both in the first post and in this one. Hope this helps.

[iPenguin02]

I been doing some research into sole proprietor, thanks for the suggestion.

I'm reading different things from different websites can you help me clarify.

According to most websites i've read if i were to do business under a name other than my own i have to file a fictitious business name. Some sites state i have to file DBA (Doing Business As). I cannot find a cost some sites indicate $26 for the FBN, and you have to refile every 5 years? Is there an annual fee?

How do i check if FBN or DBA are not taken? For FBN in CA i have to take a newspaper article out stating i'm starting a business for 4 weeks? How does that work.

I also read i need a license to work from home or a permit? What other permits would i need in LA County? and Cost of all this.

What do i have to look for when looking into a business bank account? Why not just use a separate personal account?

I do appreciate this suggestion, but i don't know start up cost and if there are annual fees. I do know that i have to file my taxes under like a 1040 and the business under a schedule C. I can't find a percentage of tax taken from me from my earnings.

I'm looking into Marinenet courses that have to do with business thanks.

Did i miss anything?