What's the best bank to use for a newly formed LLC? I'm torn on whether or not to use Axos
I started a business account with PNC in 45 minutes.
How to form a California LLC without a lawyer
51–60 of 200 posts
Re: How to form a California LLC without a lawyer
#52You also need to file a California Form 568 tax return with the Franchise Tax Board and pay the $800 annual tax whether or not you have any income, or you get a big fine that increases every month you don't file... Ask me how I know :)
> pay the $800 annual fee whether or not you have any income Really? In the 2 states I've lived in, there is no annual fee for LLC's. I'm curious what the reasoning behind having a fee that large is.
To get people to move to Texas and free up the real estate. /s
Re: How to form a California LLC without a lawyer
#53Having done my own legal work for over 20 years, I still haven't found a compelling reason to create an LLC for small-time businesses.
People often ask me, "how do I start a software startup in the US?" and I answer, "You usually don't have to do anything."
Since in the US you have the option to create startups with no government approval, you should take advantage of that.
If you get funding, normally you have to redo the LLC the way the lead investor insists anyway, so just skip all the paperwork and fees and don't bother. If you're paranoid, work on a detailed ToS instead.
Regarding banks, most people are happy with BofA or Chase for the customer support. If you want to deposit checks in your business name, you will need to create a separate business account using the DBA form in California. I've heard gripes about SV Bank, so reserve that one for VCs.
Note that banks don't enforce dual signature withdrawals, so if you can't trust your partner, don't put their name on the account.
Regarding residential zoning laws, don't park a bunch of cars in the street in front of your house.
Re: How to form a California LLC without a lawyer
#54Can you do this if you're not a US citizen? I assume you'd need a US-based partner in the LLC.
Companies that are entirely foreign-owned are perfectly legal. You do not need a US-based partner.
But if you're not a US-citizen and want to create a company in the US, I would highly recommend NOT forming it in California, for cost/paperwork reasons. There are many other US states that are much more business-friendly to choose from.
Re: How to form a California LLC without a lawyer
#55I 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 have a California LLC too. It's not any harder than the steps explained in the article. Certainly don't form an LLC unless you need one. You'll know you need one when you need one.
> Now guess what? You have to start filing 1120S corporate taxes plus the California equivalent. All the LLC/S Corp income flows right through onto your personal tax return, but you also get to get to file 940 and 941 payroll tax forms and the state equivalents.
This not true of all LLC's, just corporations. If you're forming a small LLC, especially a single member LLC, you can create a pass through entity that avoids all of the ceremony you're explaining. Mentioning all this makes it sound like it's obligatory to establish a corporation when you form an LLC, but that was only necessary in your specific case (probably for the company you were trying do business with to avoid AB5).
Re: How to form a California LLC without a lawyer
#56Earlier quoted context omitted.
how do you know ?
:) I forgot to file one year (still paid the $800 on time) and got hit with a $500 fine that there was no way around. That LLC made -$1300 that year.
Yea similar story. Had a partner and thought we would do a startup. Wanted to be all official so formed a LLC in CA. At the end of the year we had no revenue, and just some source code we had been plugging away at for the year. So our biggest two expenses were: $800 “standard fuck you” tax from California and about $400 to a CPA to write “$0” on a bunch of federal and state tax forms. After a couple of years of that we decided what we were working on was an expensive hobby rather than a startup and dissolved.
Re: How to form a California LLC without a lawyer
#57You also need to file a California Form 568 tax return with the Franchise Tax Board and pay the $800 annual tax whether or not you have any income, or you get a big fine that increases every month you don't file... Ask me how I know :)
Soon to be free for the first year: https://www.nolo.com/legal-updates/california-extends-first-...
Re: How to form a California LLC without a lawyer
#58The article claims as a second benefit of an LLC:
> 2. Tax benefits. You can deduct qualified business expenses from the total income of the business. Here’s a simple example: If you spent $1,000 on servers and your website made $10,000, then you’ll only pay taxes on the $9,000 in profit.
You don't need an LLC to deduct such expenses. Even sole proprietors can deduct business expenses against business profits.
Re: How to form a California LLC without a lawyer
#59Crap. I actually missed 1-2 years of paying the $800 franchise tax because like a lot of other people on this thread, it’s just used for hobbies, makes no money, and lies fallow 99% of the time. I’ve never gotten a fine in the mail for this though. Does anyone know if there’s some sort of online portal or phone number that is the best place for me to pay all the taxes and fines and make sure that in their records I am even?
Re: How to form a California LLC without a lawyer
#60I 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 have a California LLC too. It's not any harder than the steps explained in the article. Certainly don't form an LLC unless you need one. You'll know you need one when you need one. > Now guess what? You have to start filing 1120S corporate taxes plus the California equivalent. All the LLC/S Corp income flows right through onto your personal tax return, but you also get to get to file 940 and 941 payroll tax forms a…
That's a really good point, thanks for mentioning it.
Looking back on this, if it had been just an LLC it would have been no big deal at all. It would be a "disregarded entity" with ordinary 1099/Schedule C income, no different from any of my previous clients, with an easy tax return like the ones I'd done many times before.
It was the S Corp election which this client required that really messed everything up.
In hindsight, this truly was the proverbial "client from hell". It was an interesting project, albeit quite an experimental one. I got paid for only a week of work after spending a full month on it, and then I got the ongoing heartache of the S Corp nonsense to boot.
Thanks for pointing out the distinction between the LLC and the S Corp.