Friday, March 14, 2008

How to Form your own LLC.

Lately I've been doing research on how to form a LLC (limited liability corporation) yourself instead of using a third party either lawyers or accountant, reason being I'm starting a new company with a good friend of mine Mitch. I have a LLC already established for another company that I own which deals with Nightclub promotions. We used a accountant to do all the work but it cost around $1200 dollars so I wanted to see if we were actually getting a deal or was the accountant setting it up was getting most of the money. Some of you might not know what a LLC is, so I found this site to give you the quick 1 page information about LLC and what it is. If you want the long version go here Long LLC.

Ok back to the topic I really need to keep on track more. So I searched the web more and clicked numerous links to online business who will help you form a LLC for you. The average price was around $150 dollars, what they don't tell you is that that their fee doesn't hold the cost it needs to form the actual LLC which can be anywhere from a few extra hundred dollars to about $1000 or so. Then I found the perfect website if you have questions about forming your own LLC, the site is called MyNewCompany. When you get there click start my new company then it will take their instant quote section. Once your there click the button that says LLC, once you done that click the state you reside or the state you want your LLC registered in. Then presto everything comes up with a price next to it. What I found out was in California the state I'm in they charge you a franchise tax for any new companies filings.

California imposes an $800 Franchise Tax on all newly formed LLC's. This tax is due approximately 4 months after your LLC is formed (all California entities have to pay this tax, foreign and domestic). The appropriate Tax documents will be included with your order. NOTE: LLC's cannot obtain a California state Contractor's license; if you need this license, you will need to form a Corporation.NOTE: LLC's cannot obtain a California Real Estate Broker's license; if you need this license, you will need to form a Corporation.

so this is what I have to pay if I did the LLC myself.

$800 dollars franchise tax
$79 dollars state filing fee
$20 stamps and gas (for sending files and driving)
$25 Tax Id (so you can open an business account at a bank) also called FEIN.

$924 to form LLC myself

what I paid to form one with my accountant

that's a difference of

Not to mention that time is valuable to me and all this stuff would take more then I probable would like to spend I'd rather just use my accountant again. But if you want to save around 300 dollars you should do it yourself. Maybe in your state it might cost less. I remember reading on John Chow that he only paid $500 dollars doing it himself but he lives in Canada.

1 comment:

Who is "the Manager"? said...

interesting. For million $ business we should be a C-Corp though. 60/40 lol