Starting a new business - LLC?

[12sndsgood]

I'm an LLC. Most of my equipment was bought before my business started and I listed out all equipment and it was basically transferred over to the company and now depreciates each year. That's basically my way of explaining things. My accountant knows the legal side of things.

 

[JoeW27 1]

I've been a sole-proprietor, a C-Corp and an LLC. I've got a father-in-law who used to be an S-corp in Florida. I'm also not a lawyer or accountant.

1. Be clear about why you're seeking to set up some kind of formal structure. If it's to protect your assets (i.e.: you don't want to be sued), than incorporation is highly over-rated and your best answer is very good liability insurance. I can't emphasize this enough--people sue corporations all the time and you can end up spending money in court. For a one-person shop, being incorporated isn't some magic veil form legal suits--your best answer is a heft liability insurance program. If your objective to reduce taxation or be able to deduct business expenses, than some of what's a factor is if you have a job on the side, want to be able to contribute to retirement, have employees (vs. sub-contractors) or a spouse with a full-time job and benefits. It ain't rocket science but the answers to those questions determine which form of business is going to serve you best. For instance, when I was a C-Corp, getting my unemployment insurance filed on-time was always a major hassle for me (even though I never had any employees). Or having to document to some clients that I paid a "living wage" (a requirement for some state and local govt. clients). The point is not to argue that one approach is better than the other, it's to say that each model has strengths and weaknesses and so you need to be clear about WHY you're doing this and your specific situation in order to choose wisely.

2. Additionally, the LLC model varies somewhat with each state. When I originally became an LLC, many states didn't recognize them. Some had set them up with law partnerships in mind (so you were expected to actually be a partnership, not just one person). So I wouldn't be surprised if the LLC details for Virginia vary from those in Florida. All of the advice you get here (including from me) is nice...but you still need to go to a lawyer or accountant in Florida.

 

[The_Traveler]

I've been a sole-proprietor, a C-Corp and an LLC. I've got a father-in-law who used to be an S-corp in Florida. I'm also not a lawyer or accountant.

1. Be clear about why you're seeking to set up some kind of formal structure. If it's to protect your assets (i.e.: you don't want to be sued), than incorporation is highly over-rated and your best answer is very good liability insurance. I can't emphasize this enough--people sue corporations all the time and you can end up spending money in court. For a one-person shop, being incorporated isn't some magic veil form legal suits--your best answer is a heft liability insurance program. If your objective to reduce taxation or be able to deduct business expenses, than some of what's a factor is if you have a job on the side, want to be able to contribute to retirement, have employees (vs. sub-contractors) or a spouse with a full-time job and benefits. It ain't rocket science but the answers to those questions determine which form of business is going to serve you best. For instance, when I was a C-Corp, getting my unemployment insurance filed on-time was always a major hassle for me (even though I never had any employees). Or having to document to some clients that I paid a "living wage" (a requirement for some state and local govt. clients). The point is not to argue that one approach is better than the other, it's to say that each model has strengths and weaknesses and so you need to be clear about WHY you're doing this and your specific situation in order to choose wisely.

2. Additionally, the LLC model varies somewhat with each state. When I originally became an LLC, many states didn't recognize them. Some had set them up with law partnerships in mind (so you were expected to actually be a partnership, not just one person). So I wouldn't be surprised if the LLC details for Virginia vary from those in Florida. All of the advice you get here (including from me) is nice...but you still need to go to a lawyer or accountant in Florida.

I must have wandered onto a different site; an actual informative, intelligent response with real experience.

 

[The_Traveler]

I owned about 51% of an LLC with ~20 employees and my CEO (and I) got sued for an amazing amount of money - and my liability company said that I wasn't covered under the insurance because of a whole bunch of legal language.
After one full year of litigation, I finally reached a settlement with the company suing us.
My CEO disappeared leaving house, another business and family behind and a medium large court decision.

Without giving financial details, for me it was like getting out of a burning building by gnawing one's arm off.
Nothing really protects you from a vindictive but legal, pursuit

 

[DreamPhotos]

Thank you for taking the time to offer your input.

The_Traveler, that sounds like an awful experience!

I will speak to our accountant and see which route he thinks is best. With our other businesses he has recommended LLC, so we will see what he says this time.

 

[bratkinson]

DreamPhotos -

Other than the fun and games of setting up a business and playing bookkeeper, my biggest concern is that of your photography skills.

A little more than a week ago, you first logged on and stated you haven't taken the time to learn your D3100 and will be doing some study of photography. In another post, you stated you were going to 'self teach' and wean yourself from using the Auto mode. This may sound extremely strong, but there's no other way to say it...I think you are a LONG way from becoming a professional, fee-charging photographer. Or, at least, for long enough to making enough to put food on the table.

While there are/have been several fee-charging professional photographers on this forum with limited experience and gear, their pictures show they know how to use what they have and get consistent, good results. Your up-front statement of not learning how to use your D3100 implies you need a good deal of experience shooting with what you have before jumping off into self-employment.

My own experience? As a very well-experienced mainframe computer consultant, I jumped off on my own 27 years ago, formed an S-Corporation, had enough contacts to get started, had strong accounting experience (not degreed), and still flopped. Not enough contacts with projects to do and a couple of customers that never paid. The corporation 'survived' for 20 years, but mostly as me subcontracting to another consulting company that had good sales people but short on staff.