Forming an LLC
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That is correct, however, the LLC has "charging orders" in regard's to creditors in relation to other member's personal issues.
Also, with multiple member LLC's, it is important to define what other members can do. Whether the LLC is member managed or manager managed. Define, how to add a new member, or remove a member out. Define the scope of operations. All this is to minimize exposure.
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From what I've read, the benefit of having an operating agreement for a single-member LLC is that it strengthens the documentation that you and your LLC are two distinct entities; thus, making the task of piercing the veil more difficult.
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That is correct.
"If it walks like a duck, quacks like a duck, it is a duck."
If you form an LLC, you want to treat it accordingly on all accounts, to benefit from the entity creation. There are many benefits, such as taxation, to treating a general business like a business and not like another personal checkbook.
However, the LLC is not a silver bullet, for general liability protection. The issue with a single member LLC is, it is difficult sometimes to separate the owner from personal liability, when the owner is personally performing services.
When you start adding additional members to the LLC, the importance of the “agreement” becomes exponentially more important for many reasons.
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Application for the LLC has been submitted. I ended not up not creating a separate document for the Articles of Orgnization, as the Georgia Secretary of State Corporations Division has an online form for creating a new business. Only tricky part was making sure you do your signature as a member (owner) rather than just an organizer.
Now I wait.
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Next order of business is to decide your income tax strategy.
As a sole proprietor LLC you generally have 3 taxation choices:
(These are tax elections only)
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Disregarded entity - this is the default for a single member LLC. It is the most simple, and is filed with your personal taxes on a Sch C.
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C-Corporation - this election will tax the LLC just as if it was incorporated at the state level, and is taxed as a distinct separate entity apart from the owner. The C-corp files its own income tax return, and pays its own tax. Can have tax benefits depending on the circumstance and corporate tax rates, however, adds layer of complexity, and introduces possible double taxation on dividends.
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S-Corporation - this election is a simultaneous election to be taxed as if it was incorporated, and elect the S status, which allows for pass-through tax treatment. S-Corporation files its own information tax return, but the income tax effect is passed onto the owners, and tax is paid at the individual level.
Consult with a tax advisor, because, depending on your situation and circumstances, there may be great advantages with going with one election over the other.
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@spiral said in Forming an LLC:
Next order of business is to decide your income tax strategy.
As a sole proprietor LLC you generally have 3 taxation choices:
(These are tax elections only)
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Disregarded entity - this is the default for a single member LLC. It is the most simple, and is filed with your personal taxes on a Sch C.
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C-Corporation - this election will tax the LLC just as if it was incorporated at the state level, and is taxed as a distinct separate entity apart from the owner. The C-corp files its own income tax return, and pays its own tax. Can have tax benefits depending on the circumstance and corporate tax rates, however, adds layer of complexity, and introduces possible double taxation on dividends.
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S-Corporation - this election is a simultaneous election to be taxed as if it was incorporated, and elect the S status, which allows for pass-through tax treatment. S-Corporation files its own information tax return, but the income tax effect is passed onto the owners, and tax is paid at the individual level.
Consult with a tax advisor, because, depending on your situation and circumstances, there may be great advantages with going with one election over the other.
I had this conversation with my CPA already. For right now, "Disregarded entity" is the best fit for me.
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Eddie Jennings Services, LLC now exists.
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@eddiejennings Congrats!
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@eddiejennings said in Forming an LLC:
Eddie Jennings Services, LLC now exists.
No apostrophe?
"Eddie Jennings' Services, LLC"?
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@tim_g said in Forming an LLC:
@eddiejennings said in Forming an LLC:
Eddie Jennings Services, LLC now exists.
No apostrophe?
"Eddie Jennings' Services, LLC"?
Nope, and if I did, if I did, it would've been "Eddie Jennings's Services, LLC" = meh.
