Help! I need advice for an LLC Formation
Submitted by mason2287 on Tue, 06/12/2007 - 17:41.
Hey Jeremy,
My partner and I are looking to form an LLC to protect our assets. Robert lives in California and I live in Colorado. We are looking for the best way to go about incorporating (safest/cheapest...preferable safest). Im just asking for some non-legal, personal advance. I wanted to see if there was a good suggestion before I give a lawyer $500 for a 1 minute answer. Here are some suggestions I have already received: business llc in Delaware or Nevada w/ bank account in the same state; llc in Delaware or Nevada with licences in co and ca; llc in colorado with bank account in colorado and a business licence in california; llc in colorado and bank account in colorado with no licence in cali.
Do you have any suggestions?
Thanks,
Mason
Help! I need advice for an LLC Formation
My suggestion is South Dakota. I currently live in this state but when I move away I'll keep my business here because there is no corporate income tax or no business inventory tax.
I'll set up a UPS mailbox as my business address and have my mail forwarded. Also, to conform with the LLC rules I'll have my accountant be my representative in this state.
Help! I need advice for an LLC Formation
Do not setup in California. California corporate entities are subject to an annual $800 minimum tax. I am in California most of the time but I setup in Arizona with my accountant as my representative.
Safest thing to do
From an accountants point of view you need to incorporate or form your LLC where you are going to be doing business (i.e. physical address). If your accountant prepares your income tax returns correctly, he/she would have to attribute that income where you earned it. If you lived in Nevada for half of the year then moved to Utah for the last six months you would have to attribute that income 6 months to Nevada and 6 months to Utah. This is how tax law works. NBA players get taxed in almost every state. They keep track of the days they are in each state so that those states can apportion some of their income to their states so they get some state income tax withholdings/payments. I hope this helps clarify what you should do from a tax accountants point of view. If the IRS or State where you live audits you and you don't do this, expect large penalties.
Best,
Jon
Help! I need advice for an LLC Formation
I should have clarified my post a little further. Because I live in California I do pay state taxes. However, if my corporate entity was based in California it would be subject to an $800 minimum corporate tax regardless of how much revenue the LLC earned.
You might consider an offshore LLC
I'm not a financial expert, but I know that the financial services industry in Anguilla (Caribbean) has been carefully developed and are honest, excellent, friendly and set at a reasonable price.
Anguilla is stable socially and economically, essentially self-governing and backed by British rule. There are no foreign exchange restrictions so you can easily get your money when you want it, in whatever currency you want it in. Setting up a corporation there would require a local agent.
The idea of using an offshore corporation may seem odd, but there are some real benefits and might be worth your time to investigate the potential advantages.
Kerri Mackenzie
www.Small-Biz-Ideas.com
Good Stuff for Entrepreneurs
Be VERY Careful!
You need to be cautious if you are considering operating a business within the U.S. and setting up bank accounts and incorporating outside the U.S. The IRS is cracking down hard on businesses doing this. It's known as "tax avoidance" and it will send red flags when you file your tax return.
http://tinyurl.com/kv2xz
Cheers,
Jason Woods
Follow me on Twitter
My accountant and business
My accountant and business advisor is going to be talking about entity/business setup on day 2 of Black Ink.
I have 2 entities an S-Corp
I have 2 entities an S-Corp (my aff biz) and an LLC (qydj). This setup has tax advantages as well as legal advantages. My acct. will talk more about it on the call Tues.
Nice. I was in the process
Nice. I was in the process of finding out if this is something I would need to eventually setup.
LLC vs Inc vs S-corp etc....
I've got enough info on what the differences are. Just curious what you Jeremy have done and what's smart for an Affilaite marketer.
got twitter?
www.twitter.com/kensavage
Go offshore, but not just yet
You don't need to set up an offshore account unless you have a lot of money to "hide". It's true, this type of account isn't particularly liked by the IRS but, as a US entity, the IRS has no rights to look into many offshore accounts which is, of course, what makes them so attractive to those with a substantial income.
I would do it this way:
Start to create an income first.
When it's obvious you will continue to earn money, establish an LLC in the USA. You can establish one in a state other than your own to take advantage of that state's favorable tax rate. Delaware is used widely. I'm lucky, as South Dakota (where I am) has no corporate income tax anyway.
When your business is earning a substantial amount, and you want to legally avoid paying the IRS and prevent them from having the right to look into your account without your knowledge or consent, look into the possibility of going offshore. Panama is supposed to be one of the best places.
check with an accountant
The form of a business isn't just legal. Check with an accountant who may give you advice for free. My accountant is perplexed as to why lawyers almost always recommend LLCs. Yes the legal aspect is a bit easier but it invites the IRS into your personal business. This is my understanding of my accountants reasoning: With an LLC the business tax filing is made with your personal income tax statements with a form C (?). Therefore, if the IRS ever audits the business, your personal information and accounts can and will be part of an audit. With incorporation, like an S or C corp., taxes are filed as a business with a separate business filing. Therfore, an audit will apply only to the business and not your personal tax statements. In order for the IRS to audit you as a person, they must audit you personally. Lucky me a business of mine was audited just a couple of years ago. Very, very stressful.
chopper
c-corp
This is not legal advice. With that said a C corp has some very interesting tax advantages as well as accounting advantages to mention of few. As an example the C Corp has only a 15% tax requirment as apposed to an llc ( which is a path thru entity to your personal taxes - on avarage around 35%) although their is a cap to this amount the 15% is only for the first $50,000 of profit, then it changes.
I could go on an on but you get the idea. Also as for where to incorporate consider strongly Nevada, it has some of the best privacy laws of any state and they have no state tax, so consider the savings of a corperation with no state tax requirment. Just do the math it always pans out in your favor. Do the research before you dicide it will save you alot of time and money. Good luck!!