# LLC Questions!



## born2farm (Dec 24, 2007)

With it being a new year and I am finally 18, I am ready to grow my plowing into a real company. I am filing for my LLC, EIN, and vendors license but I do have some questions before I send anything in. The filing itself is pretty straight forward but I dont want to end up hurting myself more then I help. Heres my questions.

1) What is an LLC with only one member required to do for Self Employment Tax? Is this different then my entity's income tax? I plan on filing taxes seperate from my personal return so what am I required to do through out the year?

2) Should I be operating as an S-Corp under an LLC? I will be the sole member of the LLC operating like a sole propriatoryship, just want the legal protection of my personal assets.

3) What are some common over looked things when taking a big step to an LLC. Maybe some things you guys didnt know about when you started and then got slamed with them.

I am trying to find a general outline of what the Agent of the LLC is responsible for. I know that ill have to do self employment tax 4 times a year and turn sales tax in, but what else is there?

By the way I do have a meeting set up with my tax guy/attorney, I would just like some answers before I go in there so I dont look like a complete idiot. Plus the faster I am in and out the cheaper it will be.

Thanks in advance guys.


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## charliesoutdoor (Sep 9, 2010)

bum p


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## shovelracer (Sep 3, 2004)

Without a doubt your safest bet is to have your meeting. That is why you are paying them. There should be a flat fee for filing everything for you. Maybe around $150. LLC rules vary by state, so my advice is of little good. Yes you are required to pay income tax and self employment tax. The only thing I can think of when we changed to LLC is that we now use our EIN instead of social and we pay estimated tax quarterly instead of yearly.


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## clark lawn (Oct 7, 2005)

when i checked into it my attorney told me that going LLC for a solo op was a waste of money. if you have employees that are going to be driving your trucks and/or running equipment then it MAY be worth it. if you are solo it will not protect you at all from a lawsuit.


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## suzuki0702 (Apr 6, 2008)

clark lawn;1181362 said:


> when i checked into it my attorney told me that going LLC for a solo op was a waste of money. if you have employees that are going to be driving your trucks and/or running equipment then it MAY be worth it. if you are solo it will not protect you at all from a lawsuit.


ditto.. just throwing money away. more tax forms, more accounting, higher insurance, workers comp, unemployment.blah blah blah list goes on and on


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## born2farm (Dec 24, 2007)

Well more then likely I will be hiring a equipment operator to run a skid loader or truck for me next year so an LLC looks like the way to go.


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## deere615 (Jun 1, 2007)

I went LLC it is better as in if you grow and liability is limited to business assets not personal. I had an attorney do it all it is so much easier you just give them so info and they do everything else. JMO


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## ABsnow (Oct 24, 2009)

I recently did an Ohio LLC myself, I am not an expert but I'll offer my knowledge.

1) All my my income taxes are filed once a year with my federal return. I have a full time job other than my business, but my accountant files the self-employment tax with my yearly return. My sales tax get paid twice a year, use the Ohio Gateway Online, makes things easy. 

2) The LLC is your protection from loss of personal assets, to an extent. An S-Corp is a different type of business structure. Talk to your lawyer about protection.

3) LLC's are simple, there isn't any more surprises with an LLC than there is with any other business structure. It's literally a couple forms to file, good record keeping, an honest accountant, and your ability to run the business.

It is a rather simple process and once you get the initial paperwork filed, it is nothing more than making money and paying taxes. Make sure to keep a good relationship with your insurance agent also, that is where most of your protection comes from, not the state. As I said, I am not an expert but this is how my business operates, hopefully I'm not too far off. Good luck!


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## Mick76 (Aug 2, 2009)

Your going about it the right way... no matter what the lawyer and cpa charge you its some of the best money you'll spend. While your at it have your attorny draw up a snow removal contract.


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## kc2006 (Oct 16, 2005)

LLC is the way to go, if you decide to grow it will be better for you, and it does protect your personal assets. There's certain things a corp is good for. In a corp your pretty much totally seperate from the business, say you rack up a bunch of bills and close the doors, its on the business name not yours. You do the same with an LLC and it's on you and the business. But like some have said say you get sued, they can take all they want from the business but you'll still have your house and all your personal stuff. You can even get around the truck by owning your truck and leasing it to your company so in the event of something your safe there too. Really works well with if you drive the truck personally, I know the big construction companies that do paving do this in opposite. They own the trucks and lease them to the employees during off hours so if the employees get in a wreck and kill someone it's not a company vehicle. Smart.

There's really no surprises. You have it laid out right, I did mine right when I turned 18, I had my accountant help with the paper work, he charged me like 25 bucks to fill all the papers out, put post it notes on each for where to send them and I was on my way. File for your LLC, your service vendors lic, and your EIN. I think its 150, 25 or 50, and ein is free through the IRS. When you file your taxes it's pretty straight forward, I bring in an expense report, plus a sales list, the accountant enters it all and he'll tell you what you owe. You don't have to pay in the 4 installments, but you do get a discount if you do, because the gov doesn't have to wait longer for the money. And on your sales tax you'll either be every 6 months or monthly depending on the amount of sales you do.


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## deere615 (Jun 1, 2007)

kc2006;1182225 said:


> LLC is the way to go, if you decide to grow it will be better for you, and it does protect your personal assets. There's certain things a corp is good for. In a corp your pretty much totally seperate from the business, say you rack up a bunch of bills and close the doors, its on the business name not yours. You do the same with an LLC and it's on you and the business. But like some have said say you get sued, they can take all they want from the business but you'll still have your house and all your personal stuff. You can even get around the truck by owning your truck and leasing it to your company so in the event of something your safe there too. Really works well with if you drive the truck personally, I know the big construction companies that do paving do this in opposite. They own the trucks and lease them to the employees during off hours so if the employees get in a wreck and kill someone it's not a company vehicle. Smart.
> 
> There's really no surprises. You have it laid out right, I did mine right when I turned 18, I had my accountant help with the paper work, he charged me like 25 bucks to fill all the papers out, put post it notes on each for where to send them and I was on my way. File for your LLC, your service vendors lic, and your EIN. I think its 150, 25 or 50, and ein is free through the IRS. When you file your taxes it's pretty straight forward, I bring in an expense report, plus a sales list, the accountant enters it all and he'll tell you what you owe. You don't have to pay in the 4 installments, but you do get a discount if you do, because the gov doesn't have to wait longer for the money. And on your sales tax you'll either be every 6 months or monthly depending on the amount of sales you do.


yes, all though I think(at least here) the 4 installments is considered what you should do and there is a penalty if you dont.


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## born2farm (Dec 24, 2007)

Thanks for the info guys. I will see what the CPA says at the meeting.

One more broad question for you guys with employees. I am figuring up a budget but was looking for a rough figure on how much an employee costs you. Not counting wages. Just in insurance etc.


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## Mick76 (Aug 2, 2009)

I figured out a rough figure of 1.5 times their hourly wages... this takes into account my side of payroll taxes, works comp, f**k off time that I don't get production out of them, and s**t they break)... employees are a pita but you have to have them to grow your biz... good luck


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## cretebaby (Aug 23, 2008)

Mick76;1185010 said:


> I figured out a rough figure of 1.5 times their hourly wages... this takes into account my side of payroll taxes, works comp, f**k off time that I don't get production out of them, and* s**t they break*)... employees are a pita but you have to have them to grow your biz... good luck


If you are counting that you better make it 2x the wage. :realmad:


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## jomama45 (Dec 25, 2008)

ABsnow;1181439 said:


> I recently did an Ohio LLC myself, I am not an expert but I'll offer my knowledge.
> 
> 1) All my my income taxes are filed once a year with my federal return. I have a full time job other than my business, but my accountant files the self-employment tax with my yearly return. My sales tax get paid twice a year, use the Ohio Gateway Online, makes things easy.
> 
> ...


Are you kidding????? I don't think your answer could have been any better. Thumbs Up



born2farm;1184515 said:


> Thanks for the info guys. I will see what the CPA says at the meeting.
> 
> One more broad question for you guys with employees. I am figuring up a budget but was looking for a rough figure on how much an employee costs you. Not counting wages. Just in insurance etc.


I agree with the 1.5 factor, but it is subjective and certainly approximate. If you are in engaged in work that has a high WC rate, your employees work a lot of overtime, they get long periods of unemployment, etc..... the actual rate can be substantially higher. You'll also be subjected to fairly high WC rates for the first 3 or so years, until you have a track record of claims and an experience mod is set for your company.

As for the LLC, there's no better time than now to establish it IMO. I procrastinated on mine, and waited 10 years before going through it. It took fairly serious event to finally open my eyes to the liability I was exposing myself to. When your established and then form an LLC, your going to be throwing away alot of paper, IE: unused checks, pre-printed invoices, envelopes, business cards, etc.... The minor $10 a year renewal fee for an LLC is well worth it in grand scheme of things.

One more thing: Make sure to build a good working relationship these three individuals:
- Lawyer. (Hopefully you rarely need them, but you need to have a back-up for worst case scenarios)
- Accountant (they don't necessarily have to be a CPA for a small business, but at least need to be a certified tax professional that specializes in small business.)
- Insurance broker. (A good broker is on YOUR side and will do their best to find you the best provider when it comes to WC coverage, as that is typically the vast majority of your insurance costs once you start getting large payrolls.)

Good luck, your certainly getting off on the right foot. Thumbs Up


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## Mick76 (Aug 2, 2009)

jomama45;1185064 said:


> Are you kidding????? I don't think your answer could have been any better. Thumbs Up
> 
> I agree with the 1.5 factor, but it is subjective and certainly approximate. If you are in engaged in work that has a high WC rate, your employees work a lot of overtime, they get long periods of unemployment, etc..... the actual rate can be substantially higher. You'll also be subjected to fairly high WC rates for the first 3 or so years, until you have a track record of claims and an experience mod is set for your company.
> 
> ...


And who said we don't give good advice on this forum?....... Thumbs Up


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## born2farm (Dec 24, 2007)

Hey guys thanks a ton for the responses. I am glad that there is still some people willing to help out a young guy. I understand all these numbers are approximate but they will certainly help with budgeting. Thanks again guys for all of the input


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## KM81 (Dec 18, 2010)

I would suggest a C Corp. Here is why:

1. Cheaper than an LLC (LLC: $1200-1700 C Corp: $975)

2. Tax Purposes: Snowplowing/Landscaping is basically a cash business for the most part. You are less likely to get audited being a C Corp. Also you can estimate your taxes in a more suitable fashion with exemptions and such than being an LLC

3. C Corp: Get sued. Close business. Walk away debt free
LLC: Get sued. Close business. Still owe money personally


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## jomama45 (Dec 25, 2008)

KM81;1192154 said:


> I would suggest a C Corp. Here is why:
> 
> 1. Cheaper than an LLC (*LLC: $1200-1700* C Corp: $975)


Care to elaborate on that part?


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## KM81 (Dec 18, 2010)

jomama45;1192457 said:


> Care to elaborate on that part?


I just went through all of this 2 months ago. My attorney quoted me $1300 for an LLC and $975 for a C Corp.


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## Tubby's Snow Plowing (Dec 13, 2009)

KM81;1192154 said:


> I would suggest a C Corp. Here is why:


This is ridiculous.



> 2. Tax Purposes: Snowplowing/Landscaping is basically a cash business for the most part. You are less likely to get audited being a C Corp. Also you can estimate your taxes in a more suitable fashion with exemptions and such than being an LLC


Do you understand the corporate structure of a C corp? 
Do you understand the requirements of administrative procedures?
Do you understand the C corp is taxed at a higher rate than any other entity?
Do you understand the C corp is subject to double taxation if dividends are distributed to shareholders?
Do you understand for capital raising, stocks must be sold and they are highly regulated by the SEC?

It seems you don't. C corps pay the highest taxes, are subject to double taxation, have strict administrative mandates, and are subject to more government regulation than any other legal corporate entity?



> 3. C Corp: Get sued. Close business. Walk away debt free
> LLC: Get sued. Close business. Still owe money personally


Negative. The LLC is a separate legal entity and your personal assets are not related to the LLC. You will not owe money personally if the LLC is sued. This is a falsehood that is perpetuated by people who don't know what they are talking about. The shareholders/members are not generally personally liable for anything the company does. They have the same exact limited liability among themselves.

Sorry, but an 18yo just venturing into the business world has no place with a C corporation, especially just a local snow plowing business with a sub-six figure revenue stream. Be realistic.


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## bigmac1276 (Dec 4, 2007)

I agree with Tubby. I just started an LLC a week ago, through an attorney, and everything to do with the company is going into company name so they CAN'T come after everything I own personally. Its kinda hard to understand how your personal income is included at tax time, but when it comes to legal matters your personal crap stays out. Down here I only paid $600.


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## Tubby's Snow Plowing (Dec 13, 2009)

bigmac1276;1193422 said:


> Its kinda hard to understand how your personal income is included at tax time


LLCs and S corporations have what is called "pass through taxation". This means the P&L (profit and loss) of the company is reported on the shareholders/members personal 1040 tax return. The entity itself isn't taxed, so the income tax assessed is based upon the lower personal income tax rate rather than the corporate tax rate of C corporations, which is about double the level of personal income tax. All else equal, S corporations and LLCs (even sole proprietorships) pay less income tax than C corporations. If you love paying taxes, file a C corporation. They pay taxes out the wazoo.

How your personal income tax comes into play with tax filing is the P&L from the S corporation or LLC with pass through taxation gets added onto your personal income, since the S corporation and LLC tax rate is the same as the personal tax rate. This streamlines paperwork. S corporation shareholders will report income on the 1120S and K-1. Single member LLC will file a Schedule C form onto their 1040 form. Partnerships or LLCs that elect to be taxed as an S corporation (thereby mitigating the self employment tax filed on Schedule SE) will file a 1065 and K-1.

LLCs benefit by being taxed at the personal tax rate but have simplified tax filings being done on the personal 1040 with Schedule C and SE, thereby filing taxes in the same manner as a sole proprietorship. This is why it's commonly referred to as "LLCs are taxed like a sole proprietorship".

S corporations benefit by being taxed at the personal tax rate, dodging the hefty double taxation of C corporations, and eliminating the self employment tax on dividends (bonuses). Say you pay yourself a salary of $50,000 per year. You pay yourself a dividend (bonus) of $5,000 at the end of the year. You have to pay self employment tax on the $50,000 salary, but the $5,000 bonus is not subject to self employment tax, just the normal tax rate.

Currently the self employment tax is 15.3%. If you want to avoid this you can either file for an S corporation or file for an LLC and elect to be taxed as an S corporation.

1. Businesses exist not to sell a service or a product, but to make profit.
2. A business's number one goal is to make profit.
3. A business's number two goal is to reduce tax liability.
4. A business's end goal is to have as much cash on hand with as little taxes paid on that cash.


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## KM81 (Dec 18, 2010)

Hey pal, I was under the impression that this was an internet forum and that the kid was looking for opinions. This is mine. Don't be a dick.


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## Tubby's Snow Plowing (Dec 13, 2009)

I gave my opinion too. Welcome to the Internet.


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## born2farm (Dec 24, 2007)

No need to get into a fight. I respect all of your inputs. I think an LLC is the route I am going to take. I have a meeting with my CPA next week and after that I will know for sure which route is best for me.


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## Mark Witcher (Feb 21, 2004)

I went with the S corp, just sounds better having inc. after my name than LLC. But if you look at the trademarks of alot of really big companies these days , they are using LLC. Such as Chrysler LLC.
Dont let these guys fool you, you can still be sued personally.Ask your attorney.


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## georgerk82 (Oct 29, 2010)

I have been an LLC for the last 5 years but this year I made to much money so I became an S-corp under an LLC so I could avoid the self employment tax. I dont know how it works and dont really care I have a great cpa that saves me tons of money, The best advice I could give you is to find a cpa in your area and listen to them.


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## Diesel_1 (Jan 3, 2011)

I'm about to start here in NJ. If I go with a LLC, I have to register my truck as commercial and get liability insurance?


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## georgerk82 (Oct 29, 2010)

Diesel_1;1198236 said:


> I'm about to start here in NJ. If I go with a LLC, I have to register my truck as commercial and get liability insurance?


I have to do that no matter what.


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## LB1234 (Oct 17, 2006)

KM81;1194160 said:


> Hey pal, I was under the impression that this was an internet forum and that the kid was looking for opinions. This is mine. Don't be a dick.


You weren't giving an opinion....you were stating facts, which happened to be completely off the mark. Previous poster merely corrected YOUR facts into TRUTHFUL facts. Just because you now are completely embarassed...don't name call. You making yourself look worse.


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## KM81 (Dec 18, 2010)

LB1234;1199078 said:


> You weren't giving an opinion....you were stating facts, which happened to be completely off the mark. Previous poster merely corrected YOUR facts into TRUTHFUL facts. Just because you now are completely embarassed...don't name call. You making yourself look worse.


Once again. I follow the advice of my attorney. Not some idiot with a keyboard on an internet forum. Want to know why? Because if someone decides to sue me because of some freak accident, who do you think is going to show up in court with me? A member of an internet forum or my attorney? You do what is best for you, and ill do what is best for me.

Or I guess when you get sued for a slip and fall accident or audited by the IRS you could just copy and paste threads off of this forum and Im sure they would hold up well in court.

Oh, and if you care to argue about this further, you are more than welcome to contact my attorney, and he will better explain it than I. www.dibblelaw.com


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## Tubby's Snow Plowing (Dec 13, 2009)

georgerk82;1197940 said:


> I have been an LLC for the last 5 years but this year I made to much money so I became an S-corp under an LLC so I could avoid the self employment tax. I dont know how it works and dont really care I have a great cpa that saves me tons of money, The best advice I could give you is to find a cpa in your area and listen to them.


Yup. For sure. One thing is the LLC can be taxed like an S corp to save on the self employment tax on dividends paid to shareholders. It's just a single page form, but sometimes to keep things clear the CPA/attorney will advise you to restructure as an S corp instead of filing the entity classification form. In some states the S corp fees are less than the LLC, though in most cases it's opposite.



KM81;1199302 said:


> Once again. I follow the advice of my attorney. Not some idiot with a keyboard on an internet forum. Want to know why? Because if someone decides to sue me because of some freak accident, who do you think is going to show up in court with me? A member of an internet forum or my attorney? You do what is best for you, and ill do what is best for me.
> 
> Or I guess when you get sued for a slip and fall accident or audited by the IRS you could just copy and paste threads off of this forum and Im sure they would hold up well in court.
> 
> Oh, and if you care to argue about this further, you are more than welcome to contact my attorney, and he will better explain it than I. www.dibblelaw.com


I'm not an egomaniac with a keyboard. I've got several years of real world business experience owning and serving on board of directors for every business structure (SP, LLC, S & C corps) and have done so in three different states. Nothing on the Internet is legal advice, which can be only be given by an attorney. Anyone who takes posts on the Internet as legal advice doesn't have a clue.


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## LB1234 (Oct 17, 2006)

KM81;1199302 said:


> Once again. I follow the advice of my attorney. Not some idiot with a keyboard on an internet forum. Want to know why? Because if someone decides to sue me because of some freak accident, who do you think is going to show up in court with me? A member of an internet forum or my attorney? You do what is best for you, and ill do what is best for me.www.dibblelaw.com


Again with the name calling?

Been in business for ten years...have had same attorney, accountant, and insurance agent since the start. Attorney and accountany helped me decide to become an LLC AND stay an LLC based on MY business needs. Attorney has drafted my contracts and helped me go after deadbeats and accountant has helped me with the yearly tax filing and classifications of expenses, etc. No one is taking this advice here as legally binding...and if they are, then yes, you can consider them an idiot. HOWEVER, if someone states something that is COMPLETELY false and is corrected by the truth (note: this is not an opinion but fact) the least you can do it just admit your wrong OR bow out of the thread. Name calling the guy who corrected you???? Are we back in grammer school here?


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## KM81 (Dec 18, 2010)

LB1234;1200403 said:


> Again with the name calling?
> 
> Been in business for ten years...have had same attorney, accountant, and insurance agent since the start. Attorney and accountany helped me decide to become an LLC AND stay an LLC based on MY business needs. Attorney has drafted my contracts and helped me go after deadbeats and accountant has helped me with the yearly tax filing and classifications of expenses, etc. No one is taking this advice here as legally binding...and if they are, then yes, you can consider them an idiot. HOWEVER, if someone states something that is COMPLETELY false and is corrected by the truth (note: this is not an opinion but fact) the least you can do it just admit your wrong OR bow out of the thread. Name calling the guy who corrected you???? Are we back in grammer school here?


Are you even reading what I wrote? Here it is again in case you missed it:

If you care to argue about this further, you are welcome to contact my attorney. www.dibblelaw.com


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## PasionitGrandpa (Dec 20, 2010)

I know this post is a couple of weeks old and I am thinking about going LLC, still doing my research first.
I found this useful table to explain thing a little better and I thought I would share it also.
The URL is http://www.themoneyalert.com/Corp-Entity-Table.html

My question is this, do I really need an attorney to file the 2 page application? Or can I do it with the help of my brother who is a CPA. LLC will be in Ohio


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## georgerk82 (Oct 29, 2010)

PasionitGrandpa;1223054 said:


> I know this post is a couple of weeks old and I am thinking about going LLC, still doing my research first.
> I found this useful table to explain thing a little better and I thought I would share it also.
> The URL is http://www.themoneyalert.com/Corp-Entity-Table.html
> 
> My question is this, do I really need an attorney to file the 2 page application? Or can I do it with the help of my brother who is a CPA. LLC will be in Ohio


Your CPA can do it in Ohio, mine did.


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## born2farm (Dec 24, 2007)

Well I talked to my CPA and she agreed that an LLC would be best for me. I mentioned S-Corp and she said that we would talk about that later when my company grows.


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## PasionitGrandpa (Dec 20, 2010)

Thanks for the replies, hmm wonder what my brother would charge me to do this...


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## born2farm (Dec 24, 2007)

PasionitGrandpa;1223333 said:


> Thanks for the replies, hmm wonder what my brother would charge me to do this...


Shouldnt be much. Basically you just type your business name in and your name a couple times, print sign and mail. I went with a CPA to make sure it was the right option for me then I'll file the paper work myself.


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## Tubby's Snow Plowing (Dec 13, 2009)

PasionitGrandpa;1223054 said:


> My question is this, do I really need an attorney to file the 2 page application? Or can I do it with the help of my brother who is a CPA. LLC will be in Ohio


I would have an attorney look over the operating agreement prior to submitting to the state. Without an operating agreement, your company is run by state rules. Do things the right way and draft an operating agreement, even if it's just yourself as the sole member (owner).

Anyone can prep and send in the entity registration form, but it's right and proper for an attorney to do this for the operating agreement.


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## PasionitGrandpa (Dec 20, 2010)

thank you born


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