Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

How to form a California LLC without a lawyer

feross.org

Post reply on HN
Print view View original

91–100 of 200 posts

Re: How to form a California LLC without a lawyer

#91

Post by poulsbohemian »

giancarlostoro wrote: post #79
PopeDotNinja wrote: post #69

Earlier quoted context omitted.

A single member LLC in California is treated exactly like a sole proprietorship for tax purposes, except it costs you $800 per year. Unless you know you need it, you probably don’t need it. It won’t protect you from lawsuits, you’ll still have to provide personal guarantees on loans, etc. Source: had single member CA LLC and wasted $800/year for a few years on it.

> It won’t protect you from lawsuits, This sounds misinformed. The point of an LLC as far as I have always understood it is that if someone sues your company they cannot take your personal assets as collateral but only that which belongs to the company. If someone sues you, you can lose a crappy small LLC or would you rather lose your home as part of a settlement cause somebody is a monster. Feel free to correct me i…

I am not a lawyer, but I've been in business long enough and have been through enough legal issues to know that forming an LLC isn't sufficient to keep you from getting sued personally or having the corporate veil pierced if someone wants to come after you. In this regard, the parent posters are correct - there may be good reasons for you to form an LLC, but legal protection is a grey area.

Re: How to form a California LLC without a lawyer

#93

Post by ende »

gamblor956 wrote: post #75
Stratoscope wrote: post #47

Earlier quoted context omitted.

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 o…

You clearly misunderstood something because that's not a CA law and that isn't how a consultant or contractor would prove their legal entitys existence to a client.

My guess is that they were trying to shield themselves from the possibility of reclassification via IRS audit.

Re: How to form a California LLC without a lawyer

#94

Post by poulsbohemian »

xur17 wrote: post #16
inoffensivename wrote: post #13

You 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.

What states are these? I've had fees in every state I've every formed an LLC in and/or been a foreign corp in.

Re: How to form a California LLC without a lawyer

#95

Post by poulsbohemian »

jaja99 wrote: post #88

Can someone tell me how to form LLC in WA state and not publish our home/business address? We will be working from home, but we don’t want our home address to end up in public search records. Any help or recommendation?

Get a mailbox at a UPS store or similar mail drop service. Easy peasy. This gets around the "No PO Box" requirements that many government forms have because the mail drop service will have a storefront address. So you end up being 124 Mainstreet Box 47.

Re: How to form a California LLC without a lawyer

#97

Post by cobbzilla »

ramraj07 wrote: post #63
cobbzilla wrote: post #54

Earlier quoted context omitted.

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.

What if you have to bill clients incorporated in CA?

(IANAL disclaimer) Merely having customers in California does not create a "locus of business" in CA that would require you to pay the $800 annual fee. On the other hand, if you have an office and/or employees in CA, it probably would.

Re: How to form a California LLC without a lawyer

#98

Post by poulsbohemian »

shrimpx wrote: post #89
Stratoscope wrote: post #40

Earlier quoted context omitted.

If you live and work in California, you are doing business with the state. You aren't going to avoid that, no matter how hard you try.

I wonder about this. Suppose you incorporate a LLC in Delaware that buys some stocks, and some houses in Arizona and rents them out. But you live in California. Is your LLC “doing business with California”?

I had a scenario a bit like this, but not involving any of the states you mention above. So long as I didn't have business nexus (IE: an office, employees, etc) that would come on the radar of the state, it was all clean according to my accountant and lawyer - but there's the rub in that if you have those kind of multi-state issues, you'd better have at least one lawyer and at least one accountant who know those jurisdictions and can actually answer this question.

Re: How to form a California LLC without a lawyer

#99

Post by poulsbohemian »

vmception wrote: post #68
gojomo wrote: post #58

The 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.

sole proprietorships and other unincorporated ventures are getting a lot more respect and seamlessness lately! the stimulus programs specifically included them and the SBA asked no questions you do still want the liability protections, more disciplined separation of assets and accounting by having an incorporated name, and deterrent to people looking to sue, alongside additional levels of anonymity if you choose whic…

My partner and I just had a very similar conversation as she has several business ventures that she could continue to conduct as a sole proprietor, or she could form a corporate vehicle.

My thinking is - if you are engaged in an ongoing concern, especially if it is responsible for your livelihood, it makes so much sense to explore incorporation of some variety. This could be for no other reason than to split out business vs personal finances and records. As you explore various financing, tax, and legal scenarios though, the cost to form and keep an LLC (or then choose S-corp taxation...) make it completely worth the administrative overhead.

Re: How to form a California LLC without a lawyer

#100

Post by jccooper »

PopeDotNinja wrote: post #69
gojomo wrote: post #58

The 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.

A single member LLC in California is treated exactly like a sole proprietorship for tax purposes, except it costs you $800 per year. Unless you know you need it, you probably don’t need it. It won’t protect you from lawsuits, you’ll still have to provide personal guarantees on loans, etc. Source: had single member CA LLC and wasted $800/year for a few years on it.

Just for the record, California is way off the curve here. Most states have an LLC fee of $50/yr or less (and 9 have none) making it a more reasonable proposition in those places.

I'm not sure I'd pay that much for the benefits of an LLC in California, but I'd certainly pay $8 in NY or $0 in Texas.

Post reply on HN