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Ask HN: Starting Your Own LLC?

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Re: Ask HN: Starting Your Own LLC?

#81

Post by zallarak »

C00L wrote: post #63

I'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,…

Through what context did you help out hundreds of creatives? Just curious. Do you do tax advisory for a living?

Re: Ask HN: Starting Your Own LLC?

#82

Post by waffle_ss »

tptacek wrote: post #65
ahnick wrote: post #38

Earlier 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.

Well your belief is dead wrong. Distributions are not subject to payroll taxes.

Re: Ask HN: Starting Your Own LLC?

#83

Post by waffle_ss »

ahnick wrote: post #38
tptacek wrote: post #32

Earlier 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…

Yes, that's exactly how I meant it, thanks. It's a pretty well-known shorthand for people talking about self-employment taxes (I know how payroll taxes work, thanks tptacek).

tptacek there's no need to try to save face by attacking me with your pedantry just because you got caught giving out ignorant advice.

Re: Ask HN: Starting Your Own LLC?

#84

Post by mceachen »

riku_iki wrote: post #78
SkyPuncher wrote: post #74

Earlier quoted context omitted.

This is absolutely not correct. The caveat, is you must operate like a business - including proper insurance levels. If you're not acting like a business, then you don't get business-like protections. Source: Single member LLC who has discussed the issue with my lawyer.

What would be proper insurance level for typical SaaS?

This is like asking "what insurance do you have?" Some people will carry health, auto, life, home, flood, and earthquake insurance. Some people opt for some or none, depending on applicability.

An insurance broker will happily talk you through what each gives you, and what is most relevant to your co, but it will almost always include GL (general liability), E&O (errors and omissions), and some sort of "cyber" (to pay for resulting damage from hacking). Expect other flavors of insurance to also be applicable.

Re: Ask HN: Starting Your Own LLC?

#85

Post by zhte415 »

ioddly wrote: post #64
ksdale wrote: post #56

Earlier quoted context omitted.

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.

Send an email to yourself? CC your accountant/company secretary.

Re: Ask HN: Starting Your Own LLC?

#86

Post by riku_iki »

mceachen wrote: post #84
riku_iki wrote: post #78

Earlier quoted context omitted.

What would be proper insurance level for typical SaaS?

This is like asking "what insurance do you have?" Some people will carry health, auto, life, home, flood, and earthquake insurance. Some people opt for some or none, depending on applicability. An insurance broker will happily talk you through what each gives you, and what is most relevant to your co, but it will almost always include GL (general liability), E&O (errors and omissions), and some sort of "cyber" (to pa…

Thank you for your response. I was just curious about other's best practices.

Re: Ask HN: Starting Your Own LLC?

#88

Post by mdorazio »

SkyPuncher wrote: post #74
busterarm wrote: post #30

Earlier 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.

This is absolutely not correct. The caveat, is you must operate like a business - including proper insurance levels. If you're not acting like a business, then you don't get business-like protections. Source: Single member LLC who has discussed the issue with my lawyer.

In my experience, insurance levels are determined by the work you do and clients you have, not by your entity type. Most of my 1099 contracts these days come with a professional insurance clause that is independent of the kind of business I run.

Re: Ask HN: Starting Your Own LLC?

#89

Post by jjoonathan »

ioddly wrote: post #64
ksdale wrote: post #56

Earlier quoted context omitted.

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.

Write down your plans, decisions, and reflections. It's something you should probably be doing anyway.

The only silly part is calling it a meeting, but people do seem to agree that's the terminology the IRS wants to see.

Actually, I guess there are two silly parts, although the second is arguably more sad than silly: you must be 100% clear that you are engaging in these activities with a profit motive and not for the love of learning, doing, helping... and if the IRS decides that your motive is not sufficiently (im)pure, you will owe considerable back taxes, interest, and fees.

Re: Ask HN: Starting Your Own LLC?

#90

Post by ycombonator »

ycombonator wrote: post #35

I have started a Delaware LLC several years ago and abandoned the use of it, never got a chance to file reports or close it properly. It now shows thousands I owe in annual fees. Is anyone here in the same position?

Why the downvote for asking a question ?
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