ESABLISHING AN LLC.
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- slvtn_dsgn
Hello, I have been working/freelancing in design now for 7 years and as of lately I have been looking into establishing an LLC. I am based in NYC. I am just looking for some advice to see whether or not this is a good descision.
What are the benefits? What are the drawbacks? Tax breaks?
- harlequino0
I did this in CT. I wouldn't do it again if given the chance. I disolved it less than 2 years later. The thing is, as a freelancer, the benefits don't amount to much, and actually create more problems. The big reason for an LLC is that if you go under, or file Ch. 11, the debt stops at any personal assetts. But working in design, you don't have the same debts, equipment, and inventory as say a plumbing company.
Also, you have t be careful about filing your taxes, that you don't pay twice (ie pay your business' taxes, and then your own).
Overall, i din't get the best guidace, but i leared that i did not benefit at all, and ultimately paid more in taxes as an individual.
I realize you may have very different goals, but whatever you do, do a fll business plan first, and talk to a lawyer. If you are not wlling to shell out a few bucks for the legal advice, you probably shouldn;t be doing this. Good luck!
- blaw0
an LLC pays about 50% less federal self employment tax vs. sole proprietorship.
with an LLC, though, you have to pay yourself a salary. one option is to set a low salary, but pay out bonuses.
and, as harlequino pointed out, you can't just say "fuck it" and quit. the LLC is a legal entity and would need to be disolved.
here's a good resource:
http://www.amazon.com/Working-Yo…... but a lawyer and accountant are worth meeting with.
- joyride0
most states, the LLC has taxes past through to the employees income. But talk to an accountant first, a lawyer is usually best in setting up the operating agreement (a legal part of the llc). The accountant will know the benefits and point you in the right direction.
- slvtn_dsgn0
This is great feedback. Thank you for the advice and info!
- Rand0
we did this some years ago, and I honestly don't know if it has been of any benefit
- joyride0
I think the benefit comes when someone tries to sue you. Other then that, you don't really see much plus's.
- OeufOeuf0
This might be a stupid question but is establishing an LLC the same as establishing yourself as a business?
Looking into insurance for my wife and I, hence the question. Need something that covers both me and her and possibly a little one. Someone recommended I establish a business and have my wife as an employee. Sounds a bit fishy to me, but is anyone else in this situation?
Sorry to be hijacking this thread...
- acescence0
the benefit of an LLC is the LL part, limited liability. we set one up for a record label. i would suggest paying a lawyer/accountant to do it for you
- radar0
you can get checks written to your company versus yourself.
Do you have to have a company formed to write off your home studio? And as an idividual do you have to claim a certain amount to do so, I only claim my freelancethat is documented with 1099's not the other?
- material-10
radar, as a freelancer(sole proprietor) I was writing off half my rent(live/work), cars, everything, and never raised a red flag with my accountant
- Adverture0
I just finish Incorporating (Inc.) mine last week. If you are planning on having 1 or 2 freelance gig's per month I think is worth the time and the cash to Inc. or LLC your business. You can get tax write-off for gas, meals, hosting, even your car and insurance payments.
- Rand0
I guess the LL is good if a print job goes bad, the customer won't pay and somebody wants to sue you for payment?
- TheBlueOne0
I think Inc. is better than an LLC..at any rate sit down and talk with an accountant and have him lay out the pluses and minuses...
- Point50
last tax season I brought up starting an LLC while I was meeting with my accountant durng tax season. He basically told me it didn't make sense to unless I was going to clear 6 figures worth of freelance work.
Needless to say, my brokeass is not LLC'd
:(
- andre_andreev0
we have an llc in ny and this is our first year in business, so i'm not sure exactly how taxes are going to turn out. there are project that we do where the risk of getting sued is fairly high, that was out reasoning...