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  • LLC creation

    1) Who do you use for LLC creation? I do not wish to use online websites offering entity creation.

     

    2) Does adding spouse as member of LLC provide same asset protection for the individual as if the second member was not a spouse? I understand that single member LLCs can have corporate veil pierced by the creditors but wonder is spousal LLC will be treated as single member LLC.

  • #2
    There is precious little specific precedence regarding LLCs in most states. Adding a spouse as a member would technically make it a multi-member LLC. What is not known is how will established attribution rules factor in.

    A bigger concern is what type of products and services you will be providing? An LLC generally provides little to no liability protection for the personal acts of an owner. Also, since almost all credit extended to an LLC will require a personal guarantee, there really is no creditor protection.

    The net result is that in the majority of cases for an owner-only business providing personal services, an LLC is more of a placebo than anything else. You really need the same business and liability insurance a sole proprietor would need anyway. You have to ask yourself, what is the real value.

    LLCs are a state chartered business entity. The laws and most importantly the case law precedence vary state to state. You really need to present your business plan to a professional. They are the only ones who can really tell you if an LLC is a wise or even necessary choice in your particular state for the specific fact pattern of your business.

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    • #3
      Above analysis is very good.  I'd add that despite the limited liability for personal acts of an owner, if the owner's personal assets are all otherwise protected, then that weakness is mitigated.

      I'll also add that spouses have a unity of interest that would give a court a good reason to treat an LLC owned by two spouses as a single member LLC.

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      • #4
        Spiritrider,

         

        Thank you for valuable comments. I plan to start a blog and write articles (no professional/legal advise). I will employ my kids as well. If I remain sole prop. for this purpose, I will save some on payroll taxes when I pay my kids. What do you think?

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        • #5
          I am hiring a lawyer. Worth it in the scheme of things.

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          • #6




            I am hiring a lawyer. Worth it in the scheme of things.
            Click to expand...


            Any good recommendation on such a lawyer?

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            • #7
               




              Above analysis is very good.  I’d add that despite the limited liability for personal acts of an owner, if the owner’s personal assets are all otherwise protected, then that weakness is mitigated.

              I’ll also add that spouses have a unity of interest that would give a court a good reason to treat an LLC owned by two spouses as a single member LLC.
              Click to expand...


              Thank you Asher.

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              • #8
                It is my understanding in this situation that being sole proprietor with good amount of general business liability and personal umbrella insurance should be fine.

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                • #9
                  Most general attorneys probably ok, we used one who did work with estates and real estate as this was inherited property owned by a trust.

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                  • #10
                    Thank you.

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                    • #11
                      Does anyone have a recommendation for an attorney for consultation re: entity creation? I asked a few around including my CPA and sadly all of them were basically interested in forming "an" entity for me without comprehending what I plan to accomplish. The other interesting part- no one was ready to advice via email. I like it in writing  

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                      • #12


                        Does anyone have a recommendation for an attorney for consultation re: entity creation? I asked a few around including my CPA and sadly all of them were basically interested in forming “an” entity for me without comprehending what I plan to accomplish. The other interesting part- no one was ready to advice via email. I like it in writing

                        You will need an attorney licensed in your state. I personally think hiring an attorney for this is overkill - since you will have payroll, a CPA should give you the best advice. Go to your Secretary of State's website to set up your entity.

                        If your wife is also an owner, you will either have to file as a QJV (Qualified Joint Venture) or a partnership, meaning you'll have to file a separate Form 1065. You both must materially participate in the business to be treated as a QJV. It might also make a difference if you are in a CP (Community Property) state.

                        Yes, you will save on payroll taxes if you hire your kids - assuming you have profits. You must remain a sole proprietorship, partnership, or SMLLC. This is a good way to start Roth IRAs for your kids, too.

                        btw, some CPAs actually make an effort to give real advice and work with clients virtually  

                        Good luck with your blog!
                        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                        • #13
                          Johanna,

                          Thank you. Can you help me in California?

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