LLC in NC Questions

[Bill_L]

Long story short - I had to create an LLC to get an EIN so that I could accept payment from a business for 60 sets of coasters. I could have used my SSN but didn't want to. I used ZenBusiness to setup the LLC and part of the signup was a free consultation with 1-800accountant. Apparently, you have 75 days to declare your Entity Classification Election and if you don't declare you become a 'Disregarded Entity' and get taxed at 15.3%. By declaring as an S-Corp or C-Corp it cuts your tax rate significantly (or so I'm told). They offer a flat rate service and file your business and personal taxes. By the sounds of it - they really try to use every avenue to bring your taxable income down (shop space, equipment, vehicles, owner investment loan to start the business, etc.).

They'll do all of this for the low, low, cost of ~$2,500 (but you have to act fast as this offer won't last) . I had previously contacted a CPA in Wake Forest and they quoted $600 for individual return (pretty high) and then $1,000 for S/C Corp filings. And that was starting price and could go up.

Anyone have experience with setting up an LLC and suggestions / warnings they'd like to share?

Thanks in advance!

 

[hymie123]

a simple NC LLC can be filed for minimal cost at:

North Carolina Secretary of State Sign In Sign In

North Carolina Secretary of State Sign In Sign In

www.sosnc.gov

You'll need a name for the entity so I'd suggest you search and see if the available name you want is available otherwise your LLC registration may be denied.

North Carolina Secretary of State Business Registration Search

North Carolina Secretary of State Business Registration Search

www.sosnc.gov

To get the EIN for the newly formed LLC you do that at the IRS site. I think it is free and you get the number upon completing the online form.

Apply for an Employer Identification Number (EIN) online | Internal Revenue Service

Determine your eligibility and apply online for an employer identification number (EIN).

www.irs.gov

I forget the cost but it's very inexpensive. once you have the LLC you can do a S-Corp election, My CPA did this but you should be able to do this reading the IRS site.

Really an hours worth of work to set up and very small fee.

Good luck

 

[Bill_L]

a simple NC LLC can be filed for minimal cost at:

North Carolina Secretary of State Sign In Sign In

North Carolina Secretary of State Sign In Sign In

www.sosnc.gov

You'll need a name for the entity so I'd suggest you search and see if the available name you want is available otherwise your LLC registration may be denied.

North Carolina Secretary of State Business Registration Search

North Carolina Secretary of State Business Registration Search

www.sosnc.gov

To get the EIN for the newly formed LLC you do that at the IRS site. I think it is free and you get the number upon completing the online form.

Apply for an Employer Identification Number (EIN) online | Internal Revenue Service

Determine your eligibility and apply online for an employer identification number (EIN).

www.irs.gov

I forget the cost but it's very inexpensive. once you have the LLC you can do a S-Corp election, My CPA did this but you should be able to do this reading the IRS site.

Really an hours worth of work to set up and very small fee.

Good luck

Hi Jim,
I already set up the LLC. It's more the 'post LLC' that I'm concerned with. I don't use a CPA (and have done taxes with Turbo Tax in the past) and I will need to use one to do my business taxes. There's too much I don't know about taxes for me to try and take that on.

 

[SteveHall]

I recommend a CPA. Mine does the S-corp and personal returns for <$1,000 with crisp record keeping and year end statements. It's worth it to me given the size of the corporate filing. There are firms around that will do all your receipt collection, bookkeeping, accounting, and filings for $3k-$5k.

S-corp is essentially a "pass-through" arrangement for <100 shareholders at lower tax rates. It doesn't pay tax or withhold if you pay yourself the profits, qualifying business expenses, payroll, and distributions not withstanding.

 

[SabertoothBunny]

For my wife's businesses we hire a good CPA and just accept the cost. As far as LLC vs S Corp vs C Corp it comes down to rules on money and taxes. My wife started as an LLC but switched to S Corp because of taxes and how that money is viewed by big brother.

Example, as an LLC end of the year profits are taxed. You leave profits in an account and add more profits to it next year so big brother then taxes those profits. BUT, they tax ALL profits in the account so you are being taxed twice on last years profits.

Meanwhile the corporation is taxed for profits this year and you leave them in an account. Add next years profits but you are only taxed next years on that year's profits, not all profits in the account.

The main thing to do is learn the tax rules for business classes and industry. Those tax example might not apply to every type of business, I don't know. Speak to a tax professional about those details before settling on the type of business you want. Either way, I highly encourage a CPA who will do it all correctly so you don't have to spend endless hours learning it and still maybe getting it wrong.

 

[Craptastic]

I used to have (meh, probably still an active legal entity even) a LLC that I converted later to an S-corp. I highly recommend you discuss and deal with a local accountant that other locals also recommend to you on this matter. The tax structure is quite different for each category, you know woodworking and not tax law, and your accountant will know tax law but not necessarily woodworking. You don't want to deal with some low rent "I signed up for a business finder service" accountant that won't really care about you or how you run your business. You want someone you can sit down with when it becomes time to go through the records.

My 2 cents.

 

[bainin]

I would just use the state websites-a simple LLC is like $200/yr and a simple filing once per year , don't bother with the s/c corp stuff unless you really are worried about liability and being personally sued for use of your coasters.

$2500 would take a fair chunk of profit out of coaster sets.

b

 

[Bill_L]

Appreciate the responses. I’ve reached out to some local firms and will sit down to discuss. Local is better.

 

[Drew]

Disregarded entity just means you are taxed as an individual. The IRS ignores the LLC for tax purpose. As a CPA, who doesn’t practice, I suggest you ignore Zen Business.

 

[JRedding]

Lawyer here. Agree with Drew and others on ignoring Zen Business. Talk to a tax person who’s actually hired by you and only looking out for your best interest about which tax election is best for you.

 

[blackhawk]

Bill - I am curious on why you had to start an LLC to get an EIN? I am setup as a sole proprietor and I was able to get an EIN. I am in Virginia but I didn't think that would make a difference, but I am not sure.

 

[golfdad]

I filed my LLC thru a Lawyer. Cost was $ 300

 

[tri4sale]

They offer a flat rate service and file your business and personal taxes. By the sounds of it - they really try to use every avenue to bring your taxable income down (shop space, equipment, vehicles, owner investment loan to start the business, etc.).

They'll do all of this for the low, low, cost of ~$2,500 (but you have to act fast as this offer won't last)

I have a CPA handle my businesses (multiple LLCs and and Inc) and personal taxes and I've never paid $2500 for him to do my taxes.

 

[Bill_L]

Bill - I am curious on why you had to start an LLC to get an EIN? I am setup as a sole proprietor and I was able to get an EIN. I am in Virginia but I didn't think that would make a difference, but I am not sure.

Just to keep personal assets separate. I don't anticipate ever being sued for my woodworking but figured it would be safer to keep everything separate.

 

[Gotcha6]

I filed my LLC thru a Lawyer. Cost was $ 300

That's about right for an attorney to file. Filing fee with the state is $125 and they probably spent 1/2 hour filing and then getting an EIN issued from the IRS. BTW, disregard all the spam mail you'll be getting about required NCDOL postings and the such. Not required if you don't have employees and they can be had for free from the appropriate agencies upon request.