Anyone have experience in setting up an LLC?

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mranum

mranum

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Wisconsin Rapids, WI
I have been approached about making and selling some walking canes. I would like to do it and think I could definitely move some, but not lots of them. But, liability worries me. I mean people will sue over just about anything it seems like, and I don't think a disclaimer would be enough. I was discussing this with my insurance agent and he said to get me decent protection I'm looking at about $1500 a year. No way thats doable. He recommended the LLC approach. In this state you can file it online for $130. I've seriously been thinking about this, but the problem is like with most things that you don't know much about. You don't know what it is you don't know about.

I already do a schedule C as a sole proprietor(very limited $ amounts) and I would report the LLC on that schedule C.

What are some downsides that I don't know about? Must be some.
 
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mranum said:
I have been approached about making and selling some walking canes. I would like to do it and think I could definitely move some, but not lots of them. But, liability worries me. I mean people will sue over just about anything it seems like, and I don't think a disclaimer would be enough. I was discussing this with my insurance agent and he said to get me decent protection I'm looking at about $1500 a year. No way thats doable. He recommended the LLC approach. In this state you can file it online for $130. I've seriously been thinking about this, but the problem is like with most things that you don't know much about. You don't know what it is you don't know about.

I already do a schedule C as a sole proprietor(very limited $ amounts) and I would report the LLC on that schedule C.

What are some downsides that I don't know about? Must be some.
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To me if you have to put that much thought into a product and have to worry about having insurance and all, it just not worth it to make a couple bucks. I would stick to pens. I am sure someone can sue for that too but at least you would have an implament for the attorneys to write the suit papers out with.:biggrin:
 
I had an LLC for about 8 years to protect my personal assets from any liability incurred by renting out my plane. I spent a lot of time talking with CPAs, lawyers, etc so have some experience but don't plan your business or life based on this advice. ((There's MY protection in case you listen and don't like the results and try to sue ME. Ain't life in this litigious society just Grand!))

You have to keep the LLC as a completely different entity for it to be legally protecting. If you "break" the boundaries of the LLC yourself (buying tools with your personal account then using them for the LLC is one example; shifting earnings from the LLC to your account is another) then you have no protection at all. You've blurred the lines between you and the LLC so any suing lawyer can follow suit.

So for the LLC to work you would have to move ALL your tools used to make stuff that the LLC sells to the LLC. And any tools you want to buy would have to be bought with a card or account the LLC has. And you have to have a separate Fed TaxID for the LLC and report separately. And you can only take money out as a "salary", not just because you had a sale and there is money there. (For me and my plane, having spare money around was never an issue. Which is why I folded up that shop.)

And, just for more annoyance, in CA at least, you had to pay and annual "pre-tax" to keep the LLC alive. I had to pay $800/yr to the state tax man every year whether I made money or not. If I made money, that $800 was deducted from the taxes that I needed to pay. If I didn't make money they just kept it as a "fee". Nice, no?

So, call a lawyer; call a CPA; find out the rules/regs in your state and then decide for you.

GK
 
I have an LLC and I had to get insurance when I licensed pens for my alma mater (Virginia Tech). The insurance killed me and was the ultimate demise for the products (which are now a faint memory), but my LLC is still alive and well. If you want to be protected the insurance is what will do it, the LLC only givens you somewhat of a legal barrier so that if someone sues you they don't get your house (though that doesn't mean they can't try to get it). Everything is subjective and there are no definites with this kind of crap. It sucks b/c I know where you're coming from that you'd just like to make a couple of nice things and be on your way, but unfortunately there's just no cheap, fast, easy, and risk-free way to accomplish what you're looking to do. In my genuine experience if you love wood working and have to involve complex taxes and insurance (and maybe royalties to boot) to be able to do it, then it will absolutely kill that love. Turn and run the other way without looking back and go make something just because you want to.
 
I just got my LLC here in Ohio. I will be doing it like you are thinking of doing it. Filing it with my regular taxes with a schedule C. I didn't get the advice of an attorney or CPA but I did read everything I could read about it here in Ohio first. I'm sure I am not doing it the "correct" way in regards to lawyers and accountants but since their advice isn't free, I did what I could. I did mine strictly for the need of having a parent company that I could have unlimited DBA's under and still be protected. I have my hands in a lot of different things and having them all under one roof makes it easier to keep track of. I will be getting a separate checking account and paypal as well.
 
gketell said:
And, just for more annoyance, in CA at least, you had to pay and annual "pre-tax" to keep the LLC alive. I had to pay $800/yr to the state tax man every year whether I made money or not. If I made money, that $800 was deducted from the taxes that I needed to pay. If I didn't make money they just kept it as a "fee". Nice, no?
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Cute! If you win, they win, if you lose, they win. I guess Arrrrnnnooollllddd just forgot to mention that on the ads I keep seeing on TV.:mad:
 
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