Some advice on starting LLC's in Seattle?

The IRS has a CD, maybe now a DVD which explains all the options and what you need to become a Sole Proprietor , LLP or LLC or Corporation. Call the Local IRS Office and ask about this information.

After reviewing each option, Brake Director became a LLC and my Video Work is Sole Proprietor.

Matt,

I know we discussed some of this the other night but I thought it might be helpful to have it in front of you with the (hopefully) many other insightful responses you'll get from fellow business owners here!

The main argument, I think, for having three separate LLCs for your businesses would be to segregate the liability created by each one. So, for example, if a lawsuit came up because of the work of one of your businesses, and assuming all your LLCs are properly maintained and all parties you do business with are on notice that you're an LLC, the liability reach of that lawsuit would be limited to the assets of that business alone. Without the separate entities, assets from your other businesses and/or your personal assets could be reachable by that one lawsuit.

That being said, if you have one business that is still relatively small and low-risk (an assessment you should make with the advice your attorney and business insurance provider), you may be okay with a "dba" under the umbrella of your main LLC. Check out the Department of Licensing's website for more information about registering DBAs. Andrew Schell is a great one to talk to about your business insurance questions.

Once you create your LLC(s), each one must obtain an EIN number from the IRS, and each must obtain a master business license from the state and a city business license from the city of Seattle. If, in any given quarter, one of your LLCs does no business, you still must file a "no business" return each quarter with both the city and the state. Both are relatively painless, and all can be done online to save time.

Anyhow, there's lots more to know, so if you or anyone else has questions, feel free to contact me directly. I offer free 30-minute consultations for Bizniks and would be happy to do that over the phone or in person.

Best wishes,

Valerie

As always, this post is meant for general information purposes only and is not intended to take the place of individualized legal advice from your lawyer.

Boy, there are a lot of questions, and so many of the answers depend on your individual needs, goals, worries, etc.

First a shameless plug. I'm putting on a free event tomorrow in Mill Creek that will be addressing these questions. http://biznik.com/events/what-to-expect-when-youre-expecting-business

As a general rule, I would say there are two major reasons to split business activities into different companies. One is liability, as Valarie mentioned. The other is for ownership. A partner/shareholder/member has a legal claim to property and profits from a business. If you have a partner involved in part of what you do, but not in another part, that's a very good reason to have two or three LLCs. Likewise, if you see yourself adding additional owners in the future, do you want them to have partial ownership over everything or just over certain activities?

A lesser issue is that you can choose how to tax an LLC - as an individual, partnership, C or S Corp. If you have multiple LLCs, you need multiple returns, but you have the flexibility for each to be taxed differently.

Federal, state, and city tax filings are required, often even if you have no income. Usually, no tax will be due, and they're easy to fill out, but you do need to keep up with it. Most filings can be annual, but you might be assigned a different frequency.

The property tax affadavit is required, and you'll be assessed based on the current fair value of the assets used in the business. Snohomish county (and, I believe all WA counties) have similar processes because state law only exempts personal property from property tax, not business property or real estate.

As Valarie said, you should sit down with professional advisors for help with this decision. I recommend speaking to both a lawyer and an accountant. Each is a specialist in their own area (liability and law vs accounting and tax).

I just realized I said "tomorrow". My PDA calendar was showing the wrong week. It's February 20 - a week from tomorrow.

I think it's time to go take a break for dinner before I go back to working on taxes...

Matt, I will speak to this from the perspective of someone who has helped a LOT of folks get out of messes (but I am not an attorney or accountant.)

Spend the time and money to get professional advice about this and other structural/legal aspects of the work you are currently doing and that you are considering doing. This obviously involves talking to an attorney and an accountant, and possibly more.

Find an attorney, or other professional, who can advise you on more than just the formation of your business entity (which Might be an LLC and Might be a corporation). Because yes, there are a myriad of requirements for doing business.

Your overarching entity (LLC or corporation) needs regular maintenance. This might include annual meetings, your corporate records, and so on. Failure to meet the maintenance requirements undermines the benefits of having the structure (putting you at risk).

So obviously, the more entities, the more maintenance ...

As you've already begun to touch upon, there is a regular puzzle of acronyms related to business: UBI, L&I, EIN, etc. So before you spend money in one on one meetings with attorneys and such, you can invest time expanding your vocabulary so you'll have good sense of the variables--sessions such as Justin's event are a great place for such expansion.

Really, again, expending resources to do "it" right, at the beginning, will save you tons of expenditure later on. Ask around to see how much other folks have spent, to give yourself a sense of what it can cost. And don't forget to address intellectual property and contracts.

Cheers.

Everything that everyone has said is important. You are going beyond the basics, but this CD or DVD that I mention is available from the IRS is something you should look into as well.

The rules have been changing, but many of the questions you asked are answered by this CD/DVD. You should also call the IRS and ask them these questions directly. You can confirm what you've heard here and also get the most up to date changes. I have already turned in my local and state taxes. As a LLC or LLP, the IRS requires you fill out form 1065.

One more thing that I have not seen posted here: The Business license you get from Seattle is called a master license. You can list multiple businesses and only have to pay one fee of $90 (or$45 if you earn less then $20,000 annually). You will also be given a Unified Business Identification. This will appear on you local and State renewals. If you are creating multiple LLCs then you may need to pay the State Renewal fee for each LLC. I'd recommend you call the stateto clarify this.

I do not know if I can attend this event, but I highly recommend it to anyone who wants to understand the options and how they can work for you and your business.

As far as the IRS is concerned, all LLCs are treated like some other type of business (sole proprietor, partnership, S Corp or C Corp). Depending on how it is treated, there may still be a filing requirement even if there is no income. At the very least, you'd want to file to show the expense of forming the LLC with the state.

I agree with you, Justin. That's why calling the IRS and getting informed about LLC and LLP is important. A Limited Liability Partnership is different from a Limited Liability Company - which is the way we went.

We have to renew soon.