How to structure my business?

[Steveramil]

In short, I have about 10 websites that I will be creating in the next 1 1/2yrs. So I was wondering how I should go about structuring my business since each one will be generating income.

Do I form a corporation XXXXX and then place all of my websites under that corporation?

Or do I form an LLC for each and every website?

Some of these sites I will own outright and some will have split ownership. Just looking for a little feedback pros/cons of either route?

Thanks.

[radreality]

Hi Steve,
It looks like you are just across the river from me. I know this might not be the answer you are looking for, but that question is best suited for an attorney. No one on here knows your exact situation, since there are a few factors that play into what type of legel structure you choose.

You can't really go wrong with an S-corp or an LLC, but its just a matter of which one is better suited for your situation. Plus there are many tiny things that people overlook with they do the structuring themself or through a cheap online company. I have found its a lot better to just pay the $750-$1000 to an attorney, so that way you already have a legal team to back you up who knows your business, just incase some legal hassles ever did come up.

[greggomatic76]

Radreality is right on, this is a question only an attorney can answer. As much advice or experience some of us may have with our own business entities, small variances in the sites' purpose, revenue model, etc can effect how you should set yours up.

[Steveramil]

Ok great. Currently I have created business plans for each website I plan on developing. I have finished 6/10. Shall I finish the other 4 before I talk to an attorney on how to go about structuring?

Radreality - Will the attorney charge me the charge of $xxxx to help me form all of my businesses or is that just for one? Also, yes, I am about 20min away from vancouver and am out there quite often (relatives).

[radreality]

Depending on the subject of each of the sites, an attorney might advise you that its ok to have all of them under one company name and each of the sites as a different DBA, or they might suggest to break it up into a couple different companies; there are a few factors for this.

For example, you might not want a construction business under the same legal structure as a dating website, just because they are two very different companies who carry different liabilities.

But if your sites aren't extremely different and they generally have the same or similiar liabities, or you don't mind them sharing liabilities, I wouldn't see a problem having them under one company.

The attorney will charge you for each legal entity you set up, no matter how many businesses you are running under that entity. If you are setting up multiple entities he might give you a price break. I know with my attorney, he just charges a flat rate for setting up entities, and then under that I am able to ask him unlimited questions about business practices and the best way to do things while we are in the setting up process (instead of being his hourly rate time, which can get pretty expensive)

[postman da rich kid]

Great posts in this thread.

Back when i was starting out like you I had the same questions. Well I wouldn't suggest making an LLC before you start making money. and by money i mean when you start getting around 5 - 10k per month. which realistically probably wont happen your first year in business. What you want to do is get your business name trademarked so no one else can take your name.

The reason I say dont start your LLC before you start makin gmoney is because even if you lose money your first year (which is likely) you still have to pay $800 at tax time.

[radreality]

Great posts in this thread.

Back when i was starting out like you I had the same questions. Well I wouldn't suggest making an LLC before you start making money. and by money i mean when you start getting around 5 - 10k per month. which realistically probably wont happen your first year in business. What you want to do is get your business name trademarked so no one else can take your name.

The reason I say dont start your LLC before you start makin gmoney is because even if you lose money your first year (which is likely) you still have to pay $800 at tax time.

I'm not sure where he is getting his information from, but I have never heard that before. Both LLC's and S-corps are "flow-through" entities; meaning the profits or losses flow through to you personally, essentially elliminating most business taxes (except for excise taxes), but that is with the IRS, each state has their own set of tax/business laws. Even though I am really close to Oregon, I am not familiar with the laws specific to that state.

[postman da rich kid]

I'm not sure where he is getting his information from, but I have never heard that before. Both LLC's and S-corps are "flow-through" entities; meaning the profits or losses flow through to you personally, essentially elliminating most business taxes (except for excise taxes), but that is with the IRS, each state has their own set of tax/business laws. Even though I am really close to Oregon, I am not familiar with the laws specific to that state.

Well i dont need to "get information" I own 2 LLC's and ive had all the business classes yada yada yada. Im in california. If you have never heard that than maybe you need to do a little more research.

[Steveramil]

I understand what you're saying radreality. Yes they would be "flow-through" (1099's) and therefore only my personal taxes would be in effect.

[jasaunders]

A lot of states charge a franchise tax for LLC's. ie. Delaware charges $200 per year minimum for just having an LLC registered in the state.

[ideas2earn]

erm. I would focus on generating cshflow, and when that gets to the point that you are making profits then talk to an accountant as opposed to a lawyer. Just my 2C

[buglerroller]

10 companies over 1 a year, i am on the same plan just in a shorter time frame. i have been down the route of websites and companies before, the key is one unique name that can represent all companies. all companies under main should have BL and DBA for the parent company. once one of the companies hits over 5k a month revenue then create a new llc under the main for easier tax purposes imo. i have had an attorney before and thats the road she lead me down my 2nd time around this loop. 1st time didn't have structure and everything fell. 2nd time around didn't have good personal credit and it jacked me up on the flip side with the company! wish i would a gotten dun number!

edit: cash flow is key most of all. if you dont have something going on before your company gets going how are you going to fund business. it takes money to make money.

[Dan_d]

I agree with the above... you don't necessarily need a different LLC for each, just a DBA should suffice. One point, though, is what is your end game for each? If you ever plan to sell them you should at the very least track each as a separate 'profit center.' This will make it a lot easier when you go through due diligence with a buyer. Will also help for any sort of financial analysis internally.

If this isn't an issue then you can just follow the path of least resistance and ball them all together.

[jasaunders]

It depends on the liability protection you need.
If you want all the businesses to be protected from eachother as well as protected from your personal assets, then you will want them to all be their own entity.
If it is acceptable to just have all the companies as one group protecting your personal assets, then one LLC with DBA's is fine. But in this model, if someone comes after one of your businesses for money, all of the assets of your other businesses are fair game.

[KennyJ]

In short, I have about 10 websites that I will be creating in the next 1 1/2yrs. So I was wondering how I should go about structuring my business since each one will be generating income.

Do I form a corporation XXXXX and then place all of my websites under that corporation?

Or do I form an LLC for each and every website?

Some of these sites I will own outright and some will have split ownership. Just looking for a little feedback pros/cons of either route?

Thanks.

I had the same question several years ago and from my experiences here is what you need to do.

First create a corporation.

Then create an LLC for each site/business you wish to have. Then your corporation will own each LLC except for the % of ownership that others will hold. In other words you will have a holding corporation and be setting up each company as an LLC then each investor will only have ownership in that site and not over all of your ventures and you also limit your liability.

I currently own 100% of the stock in my holding company "Jacobs Holdings Corp." which owns 1/3 in 2 different LLC's and 100% of another LLC. Send me a private message if you have any other questions or need any financing.

Hope this helps.