NYCPHP Meetup

[Michael B Allen]

On Tue, Oct 13, 2009 at 1:25 PM, Brian O'Connor <gatzby3jr at gmail.com> wrote:
> Hey guys, I hope this isn't too off-topic, as I'm sure there's a few people
> here who are in the self-employment arena that can shed some advice.
>
> As a prefix, I'm going to assume no one is a lawyer and such won't hold you
> accountable (unless you otherwise say I can).
>
> I've been doing some side web development over the past 6 months with a
> designer and things are going great, and we seem to be getting clients at a
> great pace.  Obviously, the question is arising as to whether or not we
> should LLC our "group" and make things official and to prevent losing
> everything we own, and to look more professional.  However, I've heard
> conflicting things about what to do.
>
> I was always under the impression that LLC was the way to go, but now I
> might not be so sure.  What are the rules to getting an LLC?  Do I need an
> address in the state I registered the LLC in for it to work?

Hi Brian,

Yes. You have to register your business name with the state. It has to
be unique and it has to end in "LLC" (or some limited permutations
thereof).

>  Does the LLC
> need an official bank account in order for the checks to be cashed / money
> to be transferred?

No. But it costs nothing to open one and you'll look dumb if you
cannot accept checks and wires to a company name. To open a company
bank account you just need an EIN:

  http://www.irs.gov/businesses/small/article/0%2C%2Cid%3D102767%2C00.html

This is the number that you'll use everywhere in place of your SSN
such as on a W-9 (a form that customers use verify with the IRS that
you are in fact registered as you claim).

> How do the taxes work if there's 2 members of the LLC?

I'm not sure about 2 members but for a sole member it's easy. You just
do your regular self-employed tax return but you do an extra schedule.
I suspect it's roughly the same for 2 members but I'm not sure how you
would report what percent of the revenue is yours. Just call up H&R
Block or google it.

Note that you might also need to register to collect tax in the LLC's
state if you deliver product to that state.

So just register your LLC name with the state, get the EIN, open the
back account and your done. I don't think it even costs anything. I
think maybe I paid $50 for something.

In general, becoming an LLC is very easy. When I first did it, it was
because someone sent me a big check made out to my company name. As
soon as I saw the check I literally registered the name, got the EIN,
opened the bank account and deposited the check in a matter of hours.

Note that all of the above is for a sole member LLC in NJ. It might be
a little different in NY and with a partner. I don't know. Just Google
your way through it. It's fairly obvious. At least it's not worth
paying anyone to do IMO.

Mike