Setting up an LLC (limited liability company) isn’t hard to do. There’s basically the decision to start an LLC, and then there’s the procedure for setting up LLC documentation, which is very straight forward.
I assume you are interested in starting some sort of business venture, or you wouldn’t be reading this. You could use a corporation (either taxed as a C corporation or an S corporation), a limited partnership, partnership, sole proprietorship, or you could start an LLC.
Setting up LLC Asset Protection
The “corporate shield” protection will be the same with either corporation or with any LLC you create. The partnership and sole proprietorship (you acting alone) don’t give you any liability shield from the debts and liabilities incurred in operating the business. A limited partnership will protect the limited partners, but not the general partner. Because you will be running the company, you’ll be the general partner – no protection.
From an asset protection view, use the corporation or create LLC protection when you set up an LLC. It doesn’t matter how the corporation or LLC is taxed. Asset protection is not affected by the tax structure you choose when you set up an LLC or corporation.
Setting up LLC Tax Structures
The corporation is taxed under chapter C or subchapter S of the IRS Code. The legal structure of the corporation is the same no matter how it is taxed. When you start a LLC, you get to chose how it will be taxed. You can choose to have it taxed as basically any type of entity. Just fill out the appropriate tax forms with the IRS and tell them how you want your LLC taxed when you’re starting an LLC.
When you start an LLC, you do have to follow the rules to choose your taxing structure and meet all of the deadlines. Advisors only get you half-way there in their “start LLC mode.” The LegalDoom websites forget about a lot of the “loose ends” when they walk you through how to start a LLC. I’ve seen lots of people who never knew how to address the tax issue. If you don’t make your selections, by default when you start a LLC, you’ll be taxed as a sole proprietor if you’re the sole owner, or as a partnership, if there are multiple owners (members).
How to Start an LLC
Starting a LLC is easy. All you have to do is go to your state’s website and the articles of organization forms are all there. They are short and require mostly personal information. When you start a LLC, never give more information than you need to give on the articles of organization forms, because they are public forms.
Once you’ve sent in the forms (some states let you file online) and pay the state fees, you are a limited liability company. Congratulations!!
Now the meat of the LLC has to be put on the bones of the articles of organization you just filed. Unfortunately, in almost all of the websites and even at a lot of law firms, you get the articles of organization filed and then get a boiler plate operating agreement, and a paragraph in some instruction letter that says you have to make tax choices. That’s it. That’s only “half way there.”
The operating agreement isn’t a boiler plate form (articles of organization may be boiler plate, but not the operating agreements). You’ve got to customize the operating agreement to give you full charging order protection, tax benefits, and flexibility in your LLC.
There there’s the membership certificate issue procedure, log entries, meeting minutes, resolutions and authorizations, tax filings, and the list goes on. That’s all in starting a LLC. Once you start a LLC, then there’s the ongoing maintenance, which nobody gets right. If you don’t get it right, when you get sued the judge will “pierce the corporate veil.” Yes, your LLC has a corporate veil.
My six hour audio course, LLC Wizard, with all of the computerized forms, gets you all the way there. It isn’t just how to start a LLC. It’s how to get maximum asset protection (double the asset protection you get out of most business entities).
It’s how to make an extra $10,000 or more a year. Just choosing a taxing structure in the set up LLC sequence isn’t the end of the story. How do you make more money? Nobody ever takes you there. LLC Wizard will take you there and beyond – lower your AGI and make more money across the board.
Watch my videos now and I’ll show you what needs to be done to make your business a success.