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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

#61

Post by revel »

Not a lawyer but been through the incorporation process a few times: get a startup lawyer and commit to spending $2-5k just on legal fees in your first year. Each patent you want is $20k so you should probably not waste your time or money with one unless you're damn sure you need it and it's essential to your business.

If you screw up the paperwork it will prevent you from raising money or work with others and kill your business. Honestly, I know it sucks to have to pay money that seems unrelated to your startup, but you'll pay it back many times over and have to set things up properly anyway

Re: How to form a California LLC without a lawyer

#62

Post by CalChris »

feross wrote: post #7
pianoben wrote: post #5

Earlier quoted context omitted.

Word. California always gets its cut. If you're in California, or have customers there, going to other states only increases your potential obligations.

Exactly. Which is why I just recommend forming a California LLC directly if you live in California (like I do).

Yeah. I understand the advantages of a Delaware C corporation if you need a C corporation. But I don't see the advantages of a Delaware LLC if you will be operating in California.

Re: How to form a California LLC without a lawyer

#63

Post by ramraj07 »

cobbzilla wrote: post #54
Archit3ch wrote: post #35

Can 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.

What if you have to bill clients incorporated in CA?

Re: How to form a California LLC without a lawyer

#64

Post by therockspush »

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.

the value of the llc or s-corp is the corporate veil. whether or not thats worth the $800 annual charge in CA, on top of other inconveniences, is the question.

Re: How to form a California LLC without a lawyer

#65

Post by unishark »

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.

Indeed anyone self-employed, full-time or part-time.

A LLC just (hopefully) gains you liability protection and perhaps a bit more legitimacy, in return for a big fee in California.

Re: How to form a California LLC without a lawyer

#66

Post by jjeaff »

revel wrote: post #61

Not a lawyer but been through the incorporation process a few times: get a startup lawyer and commit to spending $2-5k just on legal fees in your first year. Each patent you want is $20k so you should probably not waste your time or money with one unless you're damn sure you need it and it's essential to your business. If you screw up the paperwork it will prevent you from raising money or work with others and kill y…

Ya, we hired a top tier SV firm. They just used their own fill in the blank forms like you would get from legal zoom. And I even had to make corrections and send it back multiple times because they got the share numbers wrong and forgot to replace multiple mentions of the last company they used the form on.

Re: How to form a California LLC without a lawyer

#67

Post by unishark »

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…

Perhaps you want the website for the secretary of state. You can also look up any business and see all the public forms plus the address they're using (for those notices you're not getting).

https://businesssearch.sos.ca.gov/

Re: How to form a California LLC without a lawyer

#68

Post by vmception »

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 which can further deter potential creditors

they can also make elections to parallel regulatory or tax regimes, which you don't want to alter on your personal body. such as election 475 for active traders, converting capital gains and losses into ordinary income allowing for unlimited tax deductions on losses, instead of the default status for capital.

or setting up "blocker" corporations in other jurisdictions to help other people avoid onerous default tax regimes.

Re: How to form a California LLC without a lawyer

#69

Post by PopeDotNinja »

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.

Re: How to form a California LLC without a lawyer

#70

Post by gamblor956 »

S corps are generally preferable to LLCs if you are eligible to form one, but it also depends on your goals, i.e. if you intend to raise money, you need an LLC or C Corp.

I formed an S corp for my personal protects for tax reasons. I also used legalzoom, because it's good enough for most small businesses. (And even big ones; Panda Express is an S corp.)

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