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seanwing · 02-21-2008, 08:38 PM

Hello,

I am looking at starting a LLC in California and I am just curious as to know how much money I am looking at in investing into the prospect of incorporating my company as an LLC. I know it will cost me around $150 to have someone like Legal Zoom incorporate my company, but over the next year, how much money will I be required to pay for having my company as an LLC, not including the taxes that I will have to pay on the money that I make. The reason I want to know is because if I am only going to be making $5,000 a year and it is going to cost me $2000 in just cost for having the company incorporated, then I do not want to necessary do that. So if someone who knows about LLC's could inform and educate me on the subject, I would appreciate it. Thank you very much.

If you so choose, you can email me at seanwing90 at gmail dot com with the information. Thank You!

GuyBBY · 02-21-2008, 08:48 PM

Hey Sean,

Do this...seriously, one of the best investments you will make in starting up. Get your hands on this book:

Form An LLC in Any State by Michael Spadaccini

I'm going to email you now.

Best,

Guy

pboychuk · 02-21-2008, 08:48 PM

I registered mine on the state website for 100$ + 25 for name reservation, i think its maybe 100$ per year thereafter. The thing about sites like legalzoom is price is $150+state fees (i think), so it would be 250 instead of 100.

JMI · 02-21-2008, 08:51 PM

I don't know how much it is going to be, but you can probably expect to pay a few thousand to incorporate, varying by the state. The other thing is, I hope you realize corporation's profits are doubly taxed. Since corporations are treated like an individual, the corporation's profits are taxed, then when the money gets to you, you get taxed. So double taxes lol.

There are some good things. Most importantly, raising capital is easier because you can sell stock. Next, look into creating an S corporation. If you make $40,000 on your regular job, and you put $15,000 into the corporation, you'll only get taxed on $25,000 of your income rather than the full $40,000.

Other people may have more detailed information, I'm just going off what I learned in my entrepreneurship class for this lol.

ADVERTISE HERE! · 02-21-2008, 08:53 PM

I could be quite wrong, so someone please correct me if I am, but I think that the registration of an LLC in Cali is a bit more than $150. Either way, I think that there is an annual fee of at least $800 for an LLC. Check it out with your Sec. of State.

ADVERTISE HERE! · 02-21-2008, 08:55 PM

Quote:

Originally Posted by JMI

I don't know how much it is going to be, but you can probably expect to pay a few thousand to incorporate, varying by the state. The other thing is, I hope you realize corporation's profits are doubly taxed. Since corporations are treated like an individual, the corporation's profits are taxed, then when the money gets to you, you get taxed. So double taxes lol.

There are some good things. Most importantly, raising capital is easier because you can sell stock. Next, look into creating an S corporation. If you make $40,000 on your regular job, and you put $15,000 into the corporation, you'll only get taxed on $25,000 of your income rather than the full $40,000.

Other people may have more detailed information, I'm just going off what I learned in my entrepreneurship class for this lol.

An LLC is an entirely different animal than a corporation. Unless he elects otherwise, an LLC will not be double taxed, as it is a pass-through entity. I'm confused as to where this corporation talk is coming from.

GuyBBY · 02-21-2008, 08:59 PM

Sean,

The $100-$200 figure is correct from Jmenq. The corporation tax is not always the case.

If you want to be a C or S corp then yes, you are looking at way more than the $5000 you want to make. With an LLC there is a flat LLC tax that is anywhere from $250 to the low thousands.

The beauty of an LLC is the ability to be taxed as a partnership, and what is called a "passthrough entity". Therefore, all the income passes through the LLC to its members, hence you and anyone else you want to have on board, and then you claim the income on your own personal tax statements filed in April. You will file a 1065 w the Feds and another form with your state. The form with your state basically accounts to them that you made money there, this is what you made, and they will check to make sure the Feds got this. Now, understand that is not dealing with sales tax and other "extras" you may have with your particular business. I do non-tangible, service related business so I don't have sales tax or deal with the mess of having assets such as cars, building, certain permits, etc.

I emailed you so we can talk further there.

Thanks

G

mattSantill · 02-21-2008, 09:08 PM

California has a minimum annual tax of $800 as well as an annual fee based on the total income of the business.

Ohio on the other hand does not have this annual tax... it really differs from state to state.

Depending on your business.. the benefits of having an LLC will most likely out weigh the $800 annual fee. Agreeing with Jmeng, an LLC is completely different from a corporation... an LLC is not taxed twice.

JMI · 02-22-2008, 08:00 AM

Quote:

Originally Posted by jmenq2

An LLC is an entirely different animal than a corporation. Unless he elects otherwise, an LLC will not be double taxed, as it is a pass-through entity. I'm confused as to where this corporation talk is coming from.

I read in sean's first post that he was trying to incorporate his company. I thought he meant turn it into a corporation, and I was just trying to give my 2 cents.

Quote:

Originally Posted by seanwing

Hello,

I am looking at starting a LLC in California and I am just curious as to know how much money I am looking at in investing into the prospect of incorporating my company as an LLC. I know it will cost me around $150 to have someone like Legal Zoom incorporate my company, but over the next year, how much money will I be required to pay for having my company as an LLC, not including the taxes that I will have to pay on the money that I make. The reason I want to know is because if I am only going to be making $5,000 a year and it is going to cost me $2000 in just cost for having the company incorporated, then I do not want to necessary do that. So if someone who knows about LLC's could inform and educate me on the subject, I would appreciate it. Thank you very much.

If you so choose, you can email me at seanwing90 at gmail dot com with the information. Thank You!

Anyways, sorry about the confusion.

GuyBBY · 02-22-2008, 09:10 AM

Jeeze JMI way to cause everyone lost sleep! Haha, just kiddin', it's easy to mix things up sometimes, esp when seeing simplar topics through and through on a site like this.

G

ADVERTISE HERE! · 02-22-2008, 09:43 AM

Quote:

Originally Posted by JMI

I read in sean's first post that he was trying to incorporate his company. I thought he meant turn it into a corporation, and I was just trying to give my 2 cents.

Anyways, sorry about the confusion.

No worries. The original poster made a VERY common mistake in using "incorporating" to mean "starting a business entity."

"Incorporation" is the process by which a corporation, either S or C, begins. For an LLC, the correct terminology is "registration," as in the registration of the LLC's Articles of Organization.