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How to form a California LLC without a lawyer

feross.org

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Re: How to form a California LLC without a lawyer

#41

Post by fountainofage »

flowerlad wrote: post #12
feross wrote: post #9

Earlier quoted context omitted.

From the article: > if you form your small business as an SMLLC, and observe a few basic rules (such as keeping business finances separate from personal finances), you should be personally protected from most kinds of business liability Single-member LLCs which are run properly still get liability protection.

See: https://denhalaw.com/can-you-protect-yourself-with-a-single-... Courts in a variety of states have “pierced the veil” of a single-member LLC from the outside and have held that it is not a separate entity and thus may not be used to protect the assets of the LLC from the creditors of the member. You get liability protection, yes, but not as much as you would if you had one more member. The veil can be pierced fo…

I think this is interesting in that I don't know many people who view LLC's protections this way. The classic example is that if your rental property is in an LLC, then your tenants can't win a suit and get to your own personal house.

These examples of piercing the veil are from the other direction - a personal suit getting access to the LLC assets... Which sort of makes sense - the alternative would be the court ordering the seizure of my assets - which would be my ownership stake in the LLC. So in their example, I'd still expect to lose my ownership stake in my LLC by asset seizure even if I was in a multi-owner LLC... Or had stock in an S-corp.

Re: How to form a California LLC without a lawyer

#42

Post by closeparen »

feross wrote: post #8
flowerlad wrote: post #6

You may also need a registered agent for "Service of process". Costs $100 per year. Without it you risk default judgement in case of a lawsuit. https://www.legalzoom.com/articles/what-is-an-agent-for-serv...

You can just use your personal mailing address and check it for mail.

This puts your name, address, and association with your company name into public record. Not recommended if there is >0 probability of attention from internet crazies.

Re: How to form a California LLC without a lawyer

#44

Post by danielrpa »

CameronNemo wrote: post #39
stillmotion wrote: post #3

Earlier quoted context omitted.

You still have to pay a minimum of $800 a year to the franchise tax board for operating a non-Californian business.

If you own the LLC but don't take a salary, do you still have to pay the fee?

Yes.

Re: How to form a California LLC without a lawyer

#46

Post by c17r »

Stratoscope wrote: post #38

I have a California LLC and wish I didn't. It has been nothing but an albatross around my neck. I am almost certain I will shut it down at the end of this year. Look, if you're reading articles like this one, don't do it. Just don't do it. Get competent legal and accounting advice first. I formed my LLC four years ago when an interesting contracting project came my way. I'd worked as a 1099/Schedule C contractor in t…

I've never run into a case where the client cared how I reported my taxes. How would they even know? Did they give you a reason for this?

Re: How to form a California LLC without a lawyer

#47

Post by Stratoscope »

c17r wrote: post #46
Stratoscope wrote: post #38

I have a California LLC and wish I didn't. It has been nothing but an albatross around my neck. I am almost certain I will shut it down at the end of this year. Look, if you're reading articles like this one, don't do it. Just don't do it. Get competent legal and accounting advice first. I formed my LLC four years ago when an interesting contracting project came my way. I'd worked as a 1099/Schedule C contractor in t…

I've never run into a case where the client cared how I reported my taxes. How would they even know? Did they give you a reason for this?

Thanks for asking. They were a California company, and this state has gotten very strict on such things, doing their best to shut down the ability for people to work as independent contractors. It really sucks, but you can't fight city hall.

The idea was that the LLC/S Corp would give my client some protection against anyone claiming that the client would owe employment taxes on what they paid me. So I had to be my own corporation paying myself through a payroll service, to make sure the state and the feds would get their cut.

Put more simply:

"Nice business you've got there. Be a shame if something happened to it."

Re: How to form a California LLC without a lawyer

#48

Post by ISL »

Stratoscope wrote: post #38

I have a California LLC and wish I didn't. It has been nothing but an albatross around my neck. I am almost certain I will shut it down at the end of this year. Look, if you're reading articles like this one, don't do it. Just don't do it. Get competent legal and accounting advice first. I formed my LLC four years ago when an interesting contracting project came my way. I'd worked as a 1099/Schedule C contractor in t…

Seconded. Filing the 1040 is straightforward compared to the 1120S, and the minimum taxes are real (my experience was NYS, with incorporation in NH for historical reasons).

The 1040 instructions are maddening but nigh-complete. A thoughtful person with enough time on their hands has a prayer of figuring out even relatively subtle tax issues.

The 1120S instructions as recently as ~2015, on the other hand, feel like vague guidance. If the phrase, "Write down your income, write down your expenses, now write down your tax. Sign that you have made no mistakes under penalty of law." makes you nervous, consider expert advice or an arrangement that avoids forming an S-corp.

The state forms are generally dependent upon the federal ones, so if you make an error on the federal form, the error will flow through to the state (which may have similarly vague instructions).

If I ever need to form another corporation, I will absolutely seek professional advice and hand off the filing to a trusted CPA. @Stratoscope is doing the right thing in using plenty of italics.

Re: How to form a California LLC without a lawyer

#49

Post by ISL »

stillmotion wrote: post #3
flowerlad wrote: post #2

Cheaper to register in Delaware. Only $300 per year in LLC tax vs $800.

You still have to pay a minimum of $800 a year to the franchise tax board for operating a non-Californian business.

NYS was the same way. It was irrelevant whether the company made money or not.
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