FFL 07
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Good luck, I have the same app all ready to send. Still need to set up my LLC and all the business stuff also. Could just go individual but everything I read says LLC way to go. Of course going to hold off on all this fun stuff until I see if I get approved.
I have a separate area all ready to go in my home and zoning is good to go.
So much more than you would think, I remember looking at the form and thinking - not so bad - until you get into the weeds and see everything that is needed...
Insurance, blah... don't get me started lol.
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6,640 Posts
Don't forget the ITAR cost per year.
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27,665 Posts
LLC is a huge catch all, seems to be part of the New American Dream. VIS!
I beat ya to it, mine is turning 3 years old very soon... my LLC that is!
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9,917 Posts
I feel I should throw this in there. A single member LLC is a disregarded entity and may not protect you as much as you think. See Albright vs United States.
Also many state courts have ruled that a single member LLC is not a separate entity. And do not co-sign for your LLC
After watching an owner operator lose everything he had because his LLC did not protect him, I decided to go S-Corp.
Also many state courts have ruled that a single member LLC is not a separate entity. And do not co-sign for your LLC
After watching an owner operator lose everything he had because his LLC did not protect him, I decided to go S-Corp.
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27,665 Posts
Mine is the proper level for what it's doing.
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I deal, or at least observe a lot of this due to my job. All trucking related, but it is relevant. It’s common for a person to want to buy a new truck. Unfortunately it’s also common for owner operators to go under. Financial institutions don’t like to lend to LLC corps, so the person co-signs for his/her LLC to purchase the truck. The driver goes under and the company dies, but the $4000 truck payment don’t die with the LLC, it lives on.
The driver who had the accident was sued both as the operator and the company, which is common. Kind of a double whammy.
As a disregarded entity, a SMLLC you are protected from personal risk, but not for tax purposes, and maybe financial, depending.
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27,665 Posts
Mine has no liabilities...
I agree with you, an LLC should not produce additional liabilities. Sounds like it gets abused, a lot.
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9,917 Posts
All single member LLC’s have financial liabilities, simply because they are a disregarded entity.
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27,665 Posts
Ok Einstein explain my liabilities then...
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9,917 Posts
Already mentioned them above. Simply stated, it may not protect against personal liability should you be sued. Courts, federal, and some states, have held that a single-member LLC is not a separate entity, and can not be used to protect assets of that single-member.
A single-member LLC is taxed like a sole proprietorship unless it files the forms to be taxed like a corporation.
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25,804 Posts
Well, to be an S corp you are required to be a registered LLC or C corp and an S corp is more of a tax status than anything else. As an S corp you're required to have annual meetings, record the minutes, adopt bylaws, etc.
As a single-owner LLC you are in fact just a sole proprietorship, and even with partners all tax laws from your personal tax bracket apply as they would be required to do individual P&L's.
Either way, both are designed to limit an individual's personal liabilities and exposures, but neither can guarantee personal assets will be spared.
As a single-owner LLC you are in fact just a sole proprietorship, and even with partners all tax laws from your personal tax bracket apply as they would be required to do individual P&L's.
Either way, both are designed to limit an individual's personal liabilities and exposures, but neither can guarantee personal assets will be spared.
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9,917 Posts
multiple-member LLC’s are not disregarded entities
At the base of it, are not all LLC’s and corporations more of a tax status than anything else?
in most states. About 4 or 5 don’t require them. But if required and you don’t, you can lose your liability protection.
Look into Delaware for forming a corporation. It’s the most popular state to incorporate in (or form a LLC) for some very good reasons.
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25,804 Posts
I've registered quite a few for several people. Joys of having degrees in business and accounting. They actually make you know the ins and outs of LP's, LLC's, S corps, C corps, and DBA's.
And are you referring to the Albright bankruptcy case here in CO? Where the ruling is specifically for CO LLC's because the law is specifically written given a sole-proprieter no charging order protection? And how it MIGHT be able to be used in other states?
You should check out Hellman v Anderson and Crocker v Perotten where the courts decided to ignore the charging order protection of partnership businesses because they decided the debtor was using the LLC to avoid the debt.
I can't recall the othee parties in the third case with Fiesta Investments, LLC where the courts decided that ANY LLC, to include partnerships, are non-executory contracts thus rendering a debtor's interest in an LLC as forfeit under federal Bankruptcy laws.
So there's just as much forfeiture and liability case law against LP's and partnership LLC's. It has nothing to do with the lending, or lack there of to sole-proprieterships.
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Yes, the CO bankruptcy case. And while it was a Colorado case, most state laws are written much like the Colorado law, so prudence applies. There are other cases, I am just familiar with Albright vs United States.
My experience revolves mostly around the trucking industry. Everybody goes to school, gets their CDL, buys a truck, and becomes their own boss. My guess is 80% of these start-ups fail for one reason or another. And of those that fail, the vast majority just walk away from their failed venture.
But sometimes they do not. The individuals personal life is ruined. It’s common enough that it can not be called uncommon. So many form a LLC because they think it will protect them if something happens. And it "may".But it seems that there are many ways to "pierce the veil". Granted, an LLC generally protects the member from liability due to debt or injury and only impacts the business and business assets. If it can be proven that the member had so much control over the business that the business was not operating as a separate entity,, then things can be different.
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My point to all of this is that even being in a partnership is not going to save an LLC, as you implied. They're small business ventures that require smart business practices and avoiding predatory type lending just to secure funding. It is honestly the asset management and underwriting practices of the lending/banking industry that created these increased risk levels for a small businesses. When you're intentionally dodging debt or accepting disadvantageous loan terms, then no, your LP/LLC probably won't save you, but GB and the Mole aren't imminently liable just for being sole proprietors.
And you have the right numbers, just backwards. IIRC, 80% survive their first year but 70% fail by year 10.
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