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How to form a California LLC without a lawyer

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Re: How to form a California LLC without a lawyer

#131

Post by _31 »

eaenki wrote: post #116
brtkdotse wrote: post #111

Earlier quoted context omitted.

As a European who also worked a year in the US, it's starling how utterly _byzantine_ everything related to operating a business in the US is. Why in the everloving world would I need a lawyer that should be an extremly simple process? Forming an equivalent to a LLC in the majority of EU is a 5-10 step web form signed online, followed by some waiting and a sub 100€ one-time-fee. Furthermore, financial literacy also s…

That’s not even true. Aside from the U.K. and Estonia, I can’t think of an European country where 1) it costs less than $1K to incorporate 2) you can do it online 3) You can DIY Italy, Germany and SwitzerlanD just to pick 3 I’m familiar with, are nothing like U.K./Estonia On the other hand incorporating a C Corp in Delaware costs between $89 and $399 and you can do it online by yourself

In the Netherlands it was about €75, filled most of the paperwork out online although we did have to go in to the KVK (Chamber of Commerce) to complete the process.

Re: How to form a California LLC without a lawyer

#132

Post by Fiahil »

eaenki wrote: post #116
brtkdotse wrote: post #111

Earlier quoted context omitted.

As a European who also worked a year in the US, it's starling how utterly _byzantine_ everything related to operating a business in the US is. Why in the everloving world would I need a lawyer that should be an extremly simple process? Forming an equivalent to a LLC in the majority of EU is a 5-10 step web form signed online, followed by some waiting and a sub 100€ one-time-fee. Furthermore, financial literacy also s…

That’s not even true. Aside from the U.K. and Estonia, I can’t think of an European country where 1) it costs less than $1K to incorporate 2) you can do it online 3) You can DIY Italy, Germany and SwitzerlanD just to pick 3 I’m familiar with, are nothing like U.K./Estonia On the other hand incorporating a C Corp in Delaware costs between $89 and $399 and you can do it online by yourself

France: "Auto-entrepreneur" status is free. No conditions (and a limitation on how much money you make). "entreprise individuelle" is between 25,34 € and 130 €. SARL and SAS status is ~200 € [0].

For all of them, you can do it yourself and most of them completely online.

[0]: https://www.service-public.fr/professionnels-entreprises/vos...

Re: How to form a California LLC without a lawyer

#133

Post by throwaway0a5e »

kogus wrote: post #128

In some states, all you need is a federal EIN, which you can get free on the IRS site in about five minutes. https://www.irs.gov/businesses/small-businesses-self-employe... I live in SC, and you don't even have to inform the state that you formed an LLC. If you do want to, its about $100 and takes another online form. The idea that you would need a lawyer is absurd.

Putting hurdles up (like $500 LLC fees) in front of the various things that "legit businesses do" is a form of regulatory capture.

Basically the goal is to force businesses to choose between heavily buying into the status quo or giving government power of arbitrary enforcement over them. The licensed plumbers don't want all the journeymen who haven't spent years getting a license but can install a toilet just as well undercutting them and stealing their gravy business. By imposing regulatory hurdles at every step of the way you keep those "I'm not quite big enough to go 100% above the table" businesses under the table you keep them on the down low and you keep them from affecting regulatory change. By the time those journeymen plumbers have licenses of their own and can be 100% above the table they feel entitled to the gravy and don't want to change anything. (I only picked plumbing because it's a good example in my state, there's plenty of others).

Re: How to form a California LLC without a lawyer

#134

Post by throwaway0a5e »

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.

>I'm curious what the reasoning behind having a fee that large is.

The fee is just one small part of a litany of compliance hurdles. The purpose is to keep the small guy under the table so that he can be squashed like a bug (by a lawsuit and/or the gov itself) if he F's up.

I'm sure they have some grandiose "think of the children"-esque language they do to justify it but as someone who lives in a similar regulatory environment the practical effect is that businesses either start with lots of investment[1] or they stay as under the table as they can possibly be.[2]

[1] either capital investment, like a facility and fleet of trucks, or time investment in the status quo, for example by a white collar professional (like a PE, lawyer or accountant) spending years working under some other business and building a reputation before striking out on their own or a tradesmen getting a professional license that requires years in a field. Sometimes there's a hybrid approach where you do your 9-5 for someone who's already made the investment and do side gigs to build up a customer base and then at some point you "go legit" and start your own business.

[2] And they either stay small or try and slowly amass the capital to start an above the table business.

Re: How to form a California LLC without a lawyer

#135

Post by dboreham »

brtkdotse wrote: post #111
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.

As a European who also worked a year in the US, it's starling how utterly _byzantine_ everything related to operating a business in the US is. Why in the everloving world would I need a lawyer that should be an extremly simple process? Forming an equivalent to a LLC in the majority of EU is a 5-10 step web form signed online, followed by some waiting and a sub 100€ one-time-fee. Furthermore, financial literacy also s…

I suspect you're receiving filtered information (some people have an agenda to prove how bad the government is). You absolutely don't need a lawyer to incorporate. Businesses are registered with the state, not federally, so you're seeing data pertaining to 50 "countries". The lawyer is primarily to prevent you from making what could be costly mistakes but if you don't care about that...

I suspect financial literacy is low everywhere.

Re: How to form a California LLC without a lawyer

#136

Post by dboreham »

ghancock wrote: post #109
jonsno56 wrote: post #59

Crap. 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 a…

It might be that the LLC is liable for the taxes and not you personally. Do you really want to pay $1600 for something you aren’t really using or do you want to abandon it and walk away?

Tax collecting people probably already thought about that problem..

Re: How to form a California LLC without a lawyer

#137

Post by throwaway0a5e »

m0zg wrote: post #52
xur17 wrote: post #16

Earlier quoted context omitted.

> 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

>To get people to move to Texas and free up the real estate. /s

See also:

"To get people to move to Texas and create CA's regulatory environment there."

Re: How to form a California LLC without a lawyer

#138

Post by VLM »

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.

An example of where you do need a SMLLC is my dentist's LLC was a SMLLC twice in his career due to various partnerships forming and dissolving in the normal course of careers.

Apparently the process of adding or removing partners is, at least in my state, very simple.

My dentist and I don't have much in common so we talk about things like this. Well, he talks, I kinda mumble, under the circumstances. Are LLCs normal for dentists in general or dentists in your state or dentists in my state? I donno, I should ask him next time.

I would imagine all sorts of small service businesses with multiple partners would benefit from this situation, ranging from lawn care to IT field service to law offices. I wonder how this situation interacts with long term inherited family businesses?

Re: How to form a California LLC without a lawyer

#139

Post by Xylakant »

davehcker wrote: post #130
eaenki wrote: post #116

Earlier quoted context omitted.

That’s not even true. Aside from the U.K. and Estonia, I can’t think of an European country where 1) it costs less than $1K to incorporate 2) you can do it online 3) You can DIY Italy, Germany and SwitzerlanD just to pick 3 I’m familiar with, are nothing like U.K./Estonia On the other hand incorporating a C Corp in Delaware costs between $89 and $399 and you can do it online by yourself

Can someone comment something regarding Germany please?

It depends. For any kind of Limited Liability Company, it cannot be done online, you need to see a notary. Costs and process differ depending on what exactly you want:

* Forming a full GmbH will cost around 1000-2000 EUR for lawyer,notary,tax accountant. You strictly speaking don't need lawyer nor tax accountant, but unless you are very familiar with the process, I'd recommend you enlist their services. It will make your life substantially easier. You will also need at least 12500 EUR in cash that will be the founding capital for the GmbH - you'll need to underwrite a security for another 12500 EUR for the rest of the founding capital or just pay a total of 25000 EUR for the founding capital. You can have the new company pay all fees from that founding capital. It's there to be used, you can pay yourself a (reasonable) wage from day one, if you choose to.

* Forming a UG is substantially cheaper: Founding capital is at least 1 EUR (though you should have more or you'll bankrupt the new company when it needs to send the first letter), there's form contracts that cover trivial cases (up to 3 shareholders, even distribution of shares, ...) and in the simple cases, all fees and notary costs should be in the low 3 digits. Keep in mind that moving money in to and out of limited liability companies is not trivial, so you should have sufficient founding capital to cover the initial expected expenses.

If you don't need the protection of a limited liability company, you can always opt for just freelance status - that's a simple registration at the tax office or, if you're multiple people, form a GbR (either by contract or implicitly, but I would really recommend a written contract). You can then register the business online.

Re: How to form a California LLC without a lawyer

#140

Post by paul_f »

poulsbohemian wrote: post #91
giancarlostoro wrote: post #79

Earlier quoted context omitted.

> 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.

Unless you're especially sloppy, it's virtually impossible to "pierce" the corporate veil. It almost never happens. However, if you have a business that could be sued (ie AirBNB rental), and you have a lot of personal assets, then an LLC is a good idea IMO.
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