NYCPHP Meetup

[-rada-]

Hi Brian

I have an LLC and have some thoughts for you.

1. For cost reasons, please consider a DBA (doing-business-as) instead of an
LLC. It's cheaper (by at least a couple grand) and the piece of paper you
get from the City Hall allows you to open a bank account just as well as the
LLC formation letter.

2. Generally, if there is a problem on a contract, you are not liable for
more than the contract is worth, unless you are willfully negligent or
overstated your professional capabilities AND caused major material damage
to the client. Given that you do web development (as opposed to, say, server
admin work) and that your work is incremental (the client signs off on
deliverables) I believe your liability issues are not worth the cost of
forming an LLC.

3. If you have an office, your landlord will force you to get general
liability insurance regardless of your business entity. It should cover you
for things such as clients falling down on a wet floor in your office.

4. From my own painful personal experience I can tell you that no amount of
paperwork, liability firewall, etc. helps when things go down between two
partners. Where it does help to have an LLC with two partners, is in
marriage. I "sold" my husband 99% of my LLC as a passive investor and this
saves us the whole self-employent tax thanks to a tax loophole (the legal
kind :).
Let me know if you want to know about this further.

5. Speaking of taxes, I can recommend my accountant:
medowscpa.com

6. Where you might need an LLC, is doing consulting corp-to-corp. As a
hypothetical situation, you may work for a client on a consulting basis
full-time for a year, and then sue them for back health insurance and taxes
claiming that since your work was essentially full-time, they owe you the
same empoyment benefits as their full-timers - whereas if you were an LLC,
this would not be an issue. However I've never had a company raise this fear
with me. They either don't know, or don't care. As long as you have a
registered business entity, everyone seems to be happy.

7. Do not waste your time looking into forming an LLC in another state
unless you are 100% virtual. If you do business in New York, you will have
to foreign-qualify, and the costs will be just the same if not more in some
cases.

Hope that helps!
Rada Varshavskaya

On Tue, Oct 13, 2009 at 15:09, <talk-request at lists.nyphp.org> wrote:

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> Today's Topics:
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>   1. [OT] LLC and contract business (Brian O'Connor)
>   2. Re: [OT] LLC and contract business (Kristina Anderson)
>   3. Re: [OT] LLC and contract business (Eric Gewirtz)
>   4. Re: [OT] LLC and contract business (tedd)
>   5. Re: [OT] LLC and contract business (Michael B Allen)
>
>
> ----------------------------------------------------------------------
>
> Message: 1
> Date: Tue, 13 Oct 2009 13:25:32 -0400
> From: "Brian O'Connor" <gatzby3jr at gmail.com>
> To: NYPHP Talk <talk at lists.nyphp.org>
> Subject: [nycphp-talk] [OT] LLC and contract business
> Message-ID:
>        <29da5d150910131025v648b31b2l68664ad3c650a17d at mail.gmail.com>
> Content-Type: text/plain; charset="iso-8859-1"
>
> 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?  Does the LLC
> need an official bank account in order for the checks to be cashed / money
> to be transferred?
>  How do the taxes work if there's 2 members of the LLC?
>
> I'm very curious about how this all works!
>
> Thanks in advance,
> Brian O'Connor
> --
> Brian O'Connor
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