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My wife and I are forming an LLC for an online furniture business.
Before I pull the trigger, I have a few questions which I hope someone
can help me with:
- Are there any advantages/disadvantages to creating an LLC as a
single member or two members? Should we split 50-50 or 49-51?
-Is there any advantage to have a minority owner (wife) from a legal
or tax perspective?
- I am creating a general company for the LLC and creating a DBA for
the industry specific company (furniture). Now for two dumb questions
related to this...Can you have more than one DBA, and can you change
your DBA name later?
- Should I create the bank accounts under the general company or the
DBA company name?
- Finally, does anyone have any thoughts on using companies like
legalzoom.com to perform the LLC formation for me?
Thanks in advance for your advice,
CD
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My wife and I are forming an LLC for an online furniture business.
Before I pull the trigger, I have a few questions which I hope someone
can help me with:
- Are there any advantages/disadvantages to creating an LLC as a
single member or two members? Should we split 50-50 or 49-51?
-Is there any advantage to have a minority owner (wife) from a legal
or tax perspective?
- I am creating a general company for the LLC and creating a DBA for
the industry specific company (furniture). Now for two dumb questions
related to this...Can you have more than one DBA, and can you change
your DBA name later?
- Should I create the bank accounts under the general company or the
DBA company name?
- Finally, does anyone have any thoughts on using companies like
legalzoom.com to perform the LLC formation for me?
Thanks in advance for your advice,
CD
Let me address you last question - and the majority of your post - first.
You should seek out AND PAY a local tax advisor FIRST. A good tax pro will
be able to go over the tax implications of the various forms of legal
entities with you and help you decide if an LLC is the right one for you.
You do have other options, the most close being an S corporation. The rules
are different for the two, but just as importantly, there can be specific
instances where one type of entity is not necessarily favored over the
other. For example, Washington, DC does NOT recognize S corporations for
tax purposes. Other states, like California, have minimum fees for most
organized business entities.
I would advise you NOT to use an online service to form an entity. Most of
them will charge you to prepare the paperwork you INSTRUCT them to prepare,
but they don't give legal or tax advice. So you will get exactly what you
pay and ask for - nothing more, nothing less. And if you later find out
that what you have doesn't fit with what you wanted - too bad for you. In
my experience, it usually costs more to fix entities created by these
services that it would have cost you to meet with a real live pro and do it
right the first time.
There are a myriad of advantages and disadvantages to LLCs - as well as
every form of business entity. I have a 2-page, 33 item checklist that
outlines the most prominent of these. I go through this with my clients
BEFORE I can even recommend which entity might be appropriate.
The advantage to minority ownership will come into play when you try to get
a government contract, and usually not until then. And be careful how YOU
define minority. It is not usually what most people think it is. Woman
owned is NOT the same as minority owned.
DBAs and banking are going to be determined by your state and the banking
rules that will apply to you. Without more info, no one can really give you
a good answer other than you need to keep the books of the company separate
from all other finances. The usually purpose behind registering a DBA is so
that people at large can trace the business to the real owners in case of
need for legal action. Here in MD I am aware of NO limit on how many DBAs
you can have. I do know that when you register the DBA with the state the
state gives you a certified copy of that registration and most banks around
here (Annapolis, MD) want to see that certified copy of the DBA registration
before they will add the DBA to your account. Generally, the real company
has the bank account and all the DBAs are listed.
Do yourself a favor - find a tax pro and do it right. It will benefit you
much more in the long run.
Gene E. Utterback, EA
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My wife and I are forming an LLC for an online furniture business.
Before I pull the trigger, I have a few questions which I hope someone
can help me with:
- Are there any advantages/disadvantages to creating an LLC as a
single member or two members? Should we split 50-50 or 49-51?
-Is there any advantage to have a minority owner (wife) from a legal
or tax perspective?
- I am creating a general company for the LLC and creating a DBA for
the industry specific company (furniture). Now for two dumb questions
related to this...Can you have more than one DBA, and can you change
your DBA name later?
- Should I create the bank accounts under the general company or the
DBA company name?
- Finally, does anyone have any thoughts on using companies like
legalzoom.com to perform the LLC formation for me?
Thanks in advance for your advice,
CD
I don't know about other states, but my understanding is that in Ohio,
the majority owner of the company doesn't qualify to use his companies
health benefits, but the minority partner does, so if it's your wife,
you would be on her plan if she uses your company's health insurance.
I don't know if it has anything to do with ohio or just the insurance
company. I do not speak from personal experience, just something a
CEO told to me.
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My wife and I are forming an LLC for an online furniture business.
Before I pull the trigger, I have a few questions which I hope someone
can help me with:
- Are there any advantages/disadvantages to creating an LLC as a
single member or two members? Should we split 50-50 or 49-51?
-Is there any advantage to have a minority owner (wife) from a legal
or tax perspective?
- I am creating a general company for the LLC and creating a DBA for
the industry specific company (furniture). Now for two dumb questions
related to this...Can you have more than one DBA, and can you change
your DBA name later?
- Should I create the bank accounts under the general company or the
DBA company name?
- Finally, does anyone have any thoughts on using companies like
legalzoom.com to perform the LLC formation for me?
Thanks in advance for your advice,
CD
In most situations, a single owner LLC is much simpler to define and do
accounting for. Federal taxes for a single owner LLC can be usually be done
on 1040 Schedule C, which is included in all computerized tax programs
(TurboTax, etc). Whether you need a single or dual owner entity is something
you consult an attorney and accountant about.
If you do decide to create an LLC, most states have web pages with the
necessary forms and it is often quite easy to do without the need for
assistance. You will also have to reserve a business name from the state.
But the decision as to whether to have a an LLC (single or multiple owner),
Subchapter-S Corp, partnership, etc, is a bit more complex.
As noted by someone else, being a minority or woman owned business comes
into play when dealing with government contracts and with many large
corporations, but generally does not affect a retail business, nor does it
affect taxes.
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