Don't use LegalZoom. I've been a customer of them for years, but I'm trying to transition off of them. Stripe has a project to replace them, I think.
Ask HN: Starting Your Own LLC?
61–70 of 114 posts
Re: Ask HN: Starting Your Own LLC?
#62I wrote answers for a number of these questions for Stripe Atlas; c.f. https://stripe.com/atlas/guides/incorporation , https://stripe.com/atlas/guides/business-taxes , and the https://stripe.com/atlas/guides more generally. If there are holes after reading them, we'd love to hear about them.
Atlas customer here - I filed for an LLC myself in 2013 and then helped some entrepreneurs sign up through Atlas in 2018. While the up-front cost is higher ($160 for filing yourself vs $500 through Atlas) you get access to cheaper tax preparation and have no chance of being hit with pesky fines for not filing paperwork on time, and the cost is negligible compared to the minimum tax. Most importantly, you get access to some great support for all the ancillary stuff to running a business that is otherwise hard/expensive to come by on your own. If I had used Atlas in 2013 it would have easily paid for itself in time saved and fines avoided.
Re: Ask HN: Starting Your Own LLC?
#63I've helped hundreds of creatives figure out their formation + taxes in the past couple of years. Here're my top learnings:
- LLC formation is not just filing the article of organization. Make sure to get an EIN, an operating agreement (Google operating agreement + your state for templates), get a business license, open a business bank account (https://www.azlo.com is great), make initial contribution (don't worry, it's your money). This makes sure that your LLC is set up right (some states won't give you limited liability, if you don't do it right).
- In most states, LLCs are pass-through entities, meaning you'll file your taxes via Schedule C and pay 15.3% self-employment tax. If you plan to make $60K or more in profit, consider filing for S Corporation (significant tax benefits)
- Get a decent bookkeeping software and do your books right from day one (it pays off). Quickbooks online is great. Connect your business bank account, categorize your expenses, close your books at least quarterly.
- Pay your quarterly taxes. Even though the penalty is not huge, you'll avoid getting a huge tax bill at the end of the year
- You may be able to manage doing your own taxes for a while, but if you're serious about this, find a tax preparer to do your taxes. If you pick SCorp route, definitely get one, as it's a separate tax return and a lot more involved (i.e running payroll)
- If you go SCorp route, make sure you get the reasonable compensation right. Run yourself regular payroll (https://www.gustom.com is great) and get K1 distribution every now and then. Pass your health insurance via your S-Corp
- Invest in Sole 401K. Investing in retirement is always a good idea and you'll save a lot in taxes.
- There are a couple of all-in-one services that can help with all. If you're doing freelancing/contracting https://www.hyke.me is great. If you're selling apps, doing ecommerce etc https://www.stripe.com/atlas is great.
Hope helps.
Re: Ask HN: Starting Your Own LLC?
#64Earlier quoted context omitted.
Being a single-person LLC usually doesn't give you any of the legal advantages of having an LLC in case you get sued.
Being a single person LLC absolutely does gives you the legal advantages of an LLC, provided you maintain separation of personal and business, eg keeping business bank accounts and routing all income and expenses through them, keeping proper accounting books, signing contracts as the LLC and not as yourself, holding company meetings w/ minutes, etc. In practice this protection isn’t worth as much as it is for larger…
> holding company meetings w/ minutes
How do you hold meetings with minutes in a single person LLC? With clients/subcontractors/advisors maybe?
I'm not being sarcastic, my accountant wants me to form an LLC and if doing this helps with liability I'd be happy to go through the ceremony of it.
Re: Ask HN: Starting Your Own LLC?
#65Earlier quoted context omitted.
You're not "double paying" taxes. The employer portion of your taxes when you're an FTE isn't free money; it's part of your cost basis as an employee, and comes out of your comp.
He wasn't implying it was free money. He simply means you're paying the employer's portion as well when you are self-employed. There is no reason to do this on excess income once you have paid yourself a reasonable salary. To determine a reasonable salary simply examine what you would make if you were employed in that same job function by another company. If you are ever audited you can show you made a good faith eff…
If you're filing as an LLC, I don't believe any of your income, distribution or otherwise, is exempt from self-employment tax.
Re: Ask HN: Starting Your Own LLC?
#66I don’t see the point of an LLC if you plan to have an outside investor. The LLC will have to be converted to regular corporation (typically. C Corp) anyway. The LLC makes it easy to pass profits through but if you don’t have any yet...what’s the point?
Even if you're pre-investment & zero profit, the LLC gives limited liability to owners, usually at less cost than a corporation.
And if you need to convert, it will be easier to convert an LLC to a Del. C. than to create a Del. C. based on your co-mingled personal and business records.
Re: Ask HN: Starting Your Own LLC?
#67Earlier quoted context omitted.
He wasn't implying it was free money. He simply means you're paying the employer's portion as well when you are self-employed. There is no reason to do this on excess income once you have paid yourself a reasonable salary. To determine a reasonable salary simply examine what you would make if you were employed in that same job function by another company. If you are ever audited you can show you made a good faith eff…
If you're filing as an LLC, I don't believe any of your income, distribution or otherwise, is exempt from self-employment tax.
There is no such thing as "filing as an LLC". When you form an LLC by default the IRS considers the LLC a disregarded entity and will tax you just as if you were a sole proprietorship. (i.e. you will report your income on schedule c) You can however elect to have your LLC taxed as an S Corporation. In which case you have to pay yourself a reasonable salary and then you can take a distribution on any excess income above your reasonable salary. When you take a distribution from an S Corp it is only subject to ordinary income tax. You do NOT pay self-employment tax on distributions. If you don't believe me you can read it on TurboTax's website (https://turbotax.intuit.com/tax-tips/small-business-taxes/ho...) or any number of websites for that matter.
Re: Ask HN: Starting Your Own LLC?
#681) Doing taxes correctly as anything other than a sole proprietorship is a huge pain in the ass, especially if you're selling things across state borders, and doubly so if you're in California. I recommend finding a tax professional to handle that for you (the time it takes to do it yourself is generally not worth it). Also don't forget that if you're actually making money you'll need to pay estimated taxes quarterly…
I don’t like the tone of this advice. It’s very off putting.
Look, do what you want. If you want a business start it. You’ll need a CPA and a book keeper. These are easy to find and low cost. I pay my book keeper $200/month and my CPA a few thousand each year.
I literally have never bothered with taxes. I hand them to my CPA and just double check the numbers when he’s done. Same with my book keeper. I don’t deal with IRS letters and whatever I just scan them and forward them to him and he deals with it.
Tax/accounting/finance are the easiest part of a small business. These jobs are easy to outsource because they’re well commoditized. Tax/finance/accounting for a small business can be challenging for a lay person but it’s routine for these professionals.
Lastly, if you fuck up your taxes and accounting it’s not that big of a deal. The IRS is happy to have you sort it out and pay them what you owe with interest later. They’re very polite people. I should know.
The dirty secret about starting a small business is that everyone’s back office is a total shit show. Ask any freelance bookkeeper or CPA what state their clients were in when they acquired them.
Re: Ask HN: Starting Your Own LLC?
#691) Doing taxes correctly as anything other than a sole proprietorship is a huge pain in the ass, especially if you're selling things across state borders, and doubly so if you're in California. I recommend finding a tax professional to handle that for you (the time it takes to do it yourself is generally not worth it). Also don't forget that if you're actually making money you'll need to pay estimated taxes quarterly…
I don’t like the tone of this advice. It’s very off putting. Look, do what you want. If you want a business start it. You’ll need a CPA and a book keeper. These are easy to find and low cost. I pay my book keeper $200/month and my CPA a few thousand each year. I literally have never bothered with taxes. I hand them to my CPA and just double check the numbers when he’s done. Same with my book keeper. I don’t deal with…
Your comment amounts to the same advice as the comment you’re replying to: outsource your tax and overall finance management to a qualified 3rd party.
I’m not sure why you felt the prior comment was “offputting”; they don’t say not to start a business, they’re pointing out that financials are an area that a business owner needs to address, and that outsourcing it is often the correct route.
Re: Ask HN: Starting Your Own LLC?
#70Get a lawyer and get an accountant. Don't do your own taxes. Don't try to file paperwork for business things if you're not 100% confident that you'll do it completely correctly. The $300 you spend on a lawyer to file something will save you thousands in the long run.