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- Forming an LLC
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| Forming an LLC; the basics to get you started | |
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| Topic Started: Aug 7 2010, 08:39 PM (538 Views) | |
| eve | Aug 7 2010, 08:39 PM Post #1 |
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My presentation was tips for forming an LLC. This is a basic outline of things to consider, but, as always you'll need to consult with an attorney before starting any business. Why LLCs ? There are a number of different types of business entities to choose from when starting your SIM. Sole Proprietor, Partnership, LLC, Corporation. For the purposes of a SIM, the LLC offers the easiest, most manageable solution, while protecting your personal assets. LLCs offer liability protection for their owners, as long as you do not abuse your rights as owners. They also offer pass-through taxation so that you are not taxed twice on your profits. It protects you, while Sole Proprietor and Partnership don't, and doesn't have so many stringent legal requirements that Corporations have. Things To Do Before You Form Your LLC Research ! Research ! Research ! Purchase books on LLCs. I suggest LLCs for Dummies to get you started, as well as a more detailed thorough book to answer deeper questions. The books will also generally come with a CD of generic form templates that you can use for your business. Schedule a consultation with an Attorney. You can often get a free consultation where they will answer your basic questions and give a little guidance. Check lawyers.com if your local yellowpages doesn't have what you're looking for. Also don't feel afraid if you need to call 10 different attorneys before you find one that you like. A good attorney will be helpful, friendly and offer advice and talk through stuff with you on the phone, as opposed to having a "come here and pay me first and I might explain it" attitude. For a SIM game company, I recommend having at least 2 different types of attorneys. One that specializes in business law for your business questions (experience in dealing with internet law is also important). You will also need one that specializes in Intellectual Property Law. This is the attorney who will answer your questions about copyright, trademarks, etc. Having two attorneys doesn't mean twice the bills, it just means your questions get directed to the right specialist for help. Also, look up your state's Secretary Of State website, as well as your local government's website. They will generally have a section dedicated to businesses, with guides and resources for new business owners. It is important to remember that businesses are very much governed by state and local laws, so you cannot take the word of someone living in another state as to how things are done, as the laws may be different. You will need to spend the time researching what is required of you by your state and local governments. How To Form An LLC This is a very broad topic that has many approaches. I will list the basic things, and then you will need to research each on your own to familiarize yourself with them. The Easy Way vs The Hard Way - There are numerous filings that must be done when forming an LLC. You can be thrifty and do it by hand which saves a bunch of money, but that has the risk of error if you're not sure what you are doing. Or you can pay someone to do it for you. You can have an attorney do it, but they will charge out the butt for it. Or you can have a company do it for you (like legalzoom.com). It will cost several hundred dollars, but you will be totally set up with the basic formation, and it is done very quickly. Note that they will form a generic LLC for you, the operating agreement is very generic and you will likely want to tailor it to your needs after you receive it. Here are the basic items you will need when forming an LLC, please research each: -File your company with your state's Secretary Of State - will receive Articles Of Organization indicating your company is formed. You'll have to file a renewel each year. Also note that not all states accept single member LLC's you may need a partner. -Operating Agreement - Outlines the structure of your company and basic operating procedures -Registered Agent - Receives all mail and legal notices on your company's behalf, they filter out the junk mail and forward the important stuff to you. -Official Company Seal - Used for marking your company's official documents -Kit - A binder containing all of your company documentation, which you will need to provide when dealing with professionals such as attorneys, CPAs, Banks, etc -Membership Certificates - Given to members showing how much membership interest (ownership) they have in your company. -Membership Transfer Ledger - Keeps track of distribution of membership interest -Membership Listing - A list of all of your LLC members, addresses, SSN, etc -EIN - Employer Identification Number - Apply to the IRS for this, can be done on irs.gov -Business License - Usually a requirement of local govts, check with your local govt on what is needed -Business Bank Account - Your LLC will need to keep it's funds strictly separate from your personal funds. I cannot stress this enough. Your LLC will need it's own bank account. -Capital - You'll need to put some of your personal money into the business bank account starting out so that you have a balance to work with, and to pay the bills until your business is established and earning an income. Investing in your company is important and you need to, in order to get started. -Activity Log - Keep track of your LLCs business activities, what you did, when you did it -Annual Meeting Of Members - Formalized meeting and minutes of what was discussed, what resolutions were made. This is additional documentation of the activities of your company and very important. -May need to file an Initial Report with your Secretary of State, call them to inquire -Articles Of Amendment - Send any LLC change in info (new company members, change in address, etc) to your sec of state so that your articles can be amended. -Profit Distributions - Flexible as to when and how much, we all want to be paid, right ?  Other Considerations -Set up a consultation with a CPA. The tax laws are too complex to keep track of. You need a pro to take care of it for you and keep you out of trouble. Talk to a CPA to give you the basics of LLC taxes. You can do LLC taxes via TurboTax, but starting out, I wouldn't advise it. You need to talk to your CPA and get an idea of what deductions are acceptable and what type of book keeping you will need to do. -Either hire someone to do your book keeping for you or do it yourself. It's not hard, and can be done easily with free software like Quickbooks Simple Start. Most accountants accept Quickbooks files and will even offer classes to train you in it, if you are unsure of what you are doing. (it can look a little overwhelming at first, but is easy once you get the hang of it) -Contractors vs Employees - If you need outside resources for your LLC, such as programmers or artists, it is a billion times simpler if you contract them instead of hire them as employees. If you contract them, likely you'll want to do a Work For Hire Agreement outlining your contract (how much they will be paid, time frame for delivery, turning over copyright, etc). Keep in mind that if you equal or exceed 600 dollars for that contractor that year, you will need to file an additional form with the IRS (1099-MISC) and will need their SSN. Here is an example of a 1099-MISC, your CPA will take care of it, not much to worry about, you just need your contractor's SSN. http://www.irs.gov/instructions/i1099msc/27982j01.html Hopefully this is enough info to get you started. More research on your part will be needed to get into the details of each topic I posted above.  I know this all sounds like a lot to do and may seem a little overwhelming. Getting set up is the the most difficult part, but once you have the pieces in place there isn't much work that needs to be done to manage and maintain your LLC.I will be available in Day 2 of the Siminar to answer more questions about LLCs or questions about Horse Eden Eventing.
Edited by eve, Jan 15 2011, 04:34 PM.
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| Mama T | Aug 9 2010, 07:55 PM Post #2 |
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Audio Recording of Eve's Forming an LLC Presentation  I deeply apologize for this recording. I spent most of today attempting to smooth it out. It appears next year we will do recording in a alternate quieter space slightly farther away from me actually attending it or something. As friv mentioned at one point, you truly where our Guinea Pigs for our first run. We appreciate it and can only strive to do a better job next go around.  That being said: -headdesk- hold please xD Let's Try This Again! -Clickity!- Edited by Mama T, Aug 9 2010, 08:57 PM.
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| eve | Aug 10 2010, 06:07 PM Post #3 |
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It's all good. There is free software that you can use to record everything going into/out of your computer's soundcard. That might be a better option for next year rather than trying to record with a separate device.
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| Mama T | Aug 10 2010, 06:45 PM Post #4 |
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Actually, that is what we did in the end. We weren't sure my husbands laptop and its built in recorder would sound as well as it would coming out my. So we tried both ways, and in the end his worked much better.
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