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  1. #1
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    What is the benefit of llc

    Couple of people who i know in personal life are telling me to get a LLC because my business is growing quickly.

    So what are the benefit of getting a llc.

    Also when i was getting price quotes for a llc i was half the price for one in in California than in Pennsylvania. I currently reside in Pennsylvania. However, does it matter which state the LLC is from.


    thanks
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  2. #2
    @iloveunicorns
    Have a look at http://www.gaebler.com/LLC-Advantages.htm which describes the advantages of registering your company as a LLC. For the most part, you as the business owner won't be liable for any damages caused by your business, this would now be your business' responsibility and you don't have to worry about your personal assets being targeted if ever this occurs.
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  3. #3
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    Quote Originally Posted by antony_m View Post
    @iloveunicorns
    Have a look at http://www.gaebler.com/LLC-Advantages.htm which describes the advantages of registering your company as a LLC. For the most part, you as the business owner won't be liable for any damages caused by your business, this would now be your business' responsibility and you don't have to worry about your personal assets being targeted if ever this occurs.
    ahh i see

    so does it matter which state i choose ?
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  4. #4
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    The link is broken at the end(at least for me) because I was waiting for them to say it in the disadvantages, but they use the exact wording I was going to use. "Our article on Piercing the Corporate Veil discusses the issue in more depth." If you do get llc, look that up. That was one thing my lawyer mentioned to me back in '01 when I got incorporated. Also there is more than just LLC, so look for what one suits you best.
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  5. #5
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    I was going to point out similar to davidb tried.. that it's not just important to file and register as an LLC. It's important to ACT as a separate entity.

    Have specific accounts for business, and specific accounts for personal issues. Don't intermingle.

    If you do intermingle your personal and business finances you're basically risking throwing away your limited liability.
    (Sure, you can transfer assets to your LLC, and take distributions back if you need to move money around. Just don't pay for the family's groceries on the company account.) It becomes more complicated if your LLC has multiple members/managers.
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  6. #6
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    The best advice anybody should give is talk to a lawyer. If you start using WHT for legal advice you could be going down the wrong road...

    See even LLC owner or member can get sued...

    http://www.jamesmartinpa.com/suellcmember.html
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  7. #7
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    You limit your liability. If the company goes into debt you don't need to pay anything. It's the company's problem not yours.

    A LLC is a legal entity within it's self.
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  8. #8
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    Quote Originally Posted by RobM View Post
    The best advice anybody should give is talk to a lawyer. If you start using WHT for legal advice you could be going down the wrong road...

    See even LLC owner or member can get sued...

    http://www.jamesmartinpa.com/suellcmember.html

    Read that article, key words negligence.

    Sure, you can get sued for personal assets if YOU decide to continue to screw over or do whatever you've been doing wrong after your company severally fails.


    LLC isn't a complete liability remover, it does EXACTLY what it says, Limited Liability Company.
    Not sure what to put here :-P
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  9. #9
    Join Date
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    LLC removes liability from a person and places it on the company as an entity.
    Therefore someone can't sue you, they sue the company.
    Be warned if they can prove it was a person behind the company that caused the problem you can still be sued.
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  10. #10
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    Some good information is posted in this thread, I read about it and have learned a new thing. I never knew what LLC could do for you.
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  11. #11
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    As noted by a few people, you can still be personally liable if they can prove that you pierced the corporate veil or that you acted with gross negligence in your position.

    Unfortunately, anyone can sue anyone for anything, even if they won't ultimately win in court. That's why you want to have a good business insurance policy that covers lawsuits against directors of the company. If you do get sued personally, the insurance company handles your legal defense costs.
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  12. #12
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    There are some other options besides an LLC too, including an S or C corp. I guess an LLC is probably preferable to those for small companies because it's just a "pass through" entity to the managing members, so the company doesn't file its own taxes at all, you just make a K-1 for your personal taxes that says how much your share of the company's profits were.

    You also have pretty much complete freedom with an LLC to set up whatever rules you'd like in the Operating Agreement. The only real downside vs an S/C corp I know of is if you want to keep any profits in the company, they'll be taxed at your personal rate instead of a corporate rate, which could turn out lower? But then what's bad about an S/C corp is if you want to get those profits distributed to you personally, you'll have to pay capital gains tax on the distributions.. after they've already had the corporate tax levied on them!
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  13. #13
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    so llc is a must for small companies. i guess

    However i live in pa. But getting a llc from CA is cheaper. Does it mater which state i pick.
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  14. #14
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    Registering a LLC in CA is rarely cheaper than elsewhere with the minimum $800/yr payment you have to make to the CA Franchise Tax Board.

    It all depends on where your LLC will "do business"
    Consult a professional on what that means for you.

    Most people will choose Nevada, Delaware, or whatever state they do business in.
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  15. #15
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    Quote Originally Posted by iloveunicorns View Post
    However i live in pa. But getting a llc from CA is cheaper. Does it mater which state i pick.
    Even if you form an LLC in California, you may still have to file paperwork with Pennsylvania if you will be working from there. You can talk to an accountant about it, but you're probably better off just forming the LLC in your own state.

    We're incorporated in Delaware, but our main office is in New York, so we also maintain a Certificate of Authority from New York. Even as a Delaware corporation, we're still subject to New York's minimum annual income tax.
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  16. #16
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    It depends how big your company is. LLC's are expensive in the short term, but will save you money in the long run. It really just depends on your business plan.
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  17. Benefits

    If you have made up your mind to start your own business, you will need to figure out which type of business entity you want to set up. One of the most popular business entities is the LLC, which has many advantages and benefits. Set up an LLC can protect your personal assets, reduce your taxes and save your time and efforts in filing excessive paperwork. Formation of LLCs are preferred because they combine the limited liability protection of a corporation and the pass through taxation of a partnership.
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  18. #18
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    BQInternet is correct...

    Since it is a fact that anyone can sue anyone at anytime for any reason, having an LLC or a Corp of any type for a "small" hosting business just adds another layer of expenses and headaches.

    To a degree, those structures were put in place as an income provider for lawyers and individual States.

    It is my opinion that if someone runs their business in an upright, moral, open way, many layers of legal "protection" isn't necessary.
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  19. #19
    As people have previously stated, forming an LLC has numerous legal benefits, but it also has tax benefits. As an LLC, if you are the sole officer, you simply pay taxes on your personal 1040, using a special form. This is an advantage to being "double-taxed" by forming a corporation.
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  20. #20
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    Quote Originally Posted by sohoben View Post

    It is my opinion that if someone runs their business in an upright, moral, open way, many layers of legal "protection" isn't necessary.

    This is exactly why you DO NEED protection.

    When, not if, the day comes you or your business has to deal with an unethical customer, competitor, vendor, bank, insurance company, other attorneys, unrelated 3rd parties, feds... and the list goes on.... you will be happy to know that your personal assets are "safer".

    Do not run your networks or servers without protection. Do not run your business without protection.


    To the OP, Pennsylvania LLC's are $125 registration fee and $310 annually.

    This will take you 2 hours max. Next time you do it - 30 minutes.

    1) You need a name:
    http://www.dos.state.pa.us/corps/cwp...238&corpsNav=|


    2) Search the name DB for availability:
    https://www.corporations.state.pa.us...asp?corpsNav=|


    3) Fill out 2 page LLC registration and mail it in with a check for $125:
    http://www.dos.state.pa.us/corps/lib...20/7/8201A.pdf


    4) Now you need a free EIN (Employer Identification Number), info here:
    http://www.irs.gov/businesses/small/...=97860,00.html


    5) Go open separate bank accounts, at least 3. Use one to receive payments, one to make payments and one for savings. Transfer between them as necessary. I highly advise not to use a single bank account to conduct business.


    6) Check with your local township or county for a business license. Usually a small fee, this comes in handy if you need a loan or credit from a bank.


    7) Eventually, talk to an accountant to show you how to do your taxes. Open and read all mail from the local, state and federal governments and respond timely. Consult an attorney when you are successful and need further guidance and protection.


    Congratulations on your new business and LLC.
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