single member LLC

by Kumar
(Dallas,TX,USA)

1. Do i need resident agent ?
2. Can i put my name resident agent, i live in texas and have my apartment address which is also my LLC address
3.Veil-piercing happens to me as i m single member LLC ?
4.What to do to avoid Veil-piercing ?
5.Can i form LLC by my self ? which column or information i need to worry for Veil-piercing and for passthrough tax eligibility

6. what are the benifit to use LZ services to form an LLC

Thanks

Answer

1. Yes, every LLC requires a resident agent.

2. Yes, you can be your own resident agent, and use your home, business, or apartment address. You cannot use P.O. Boxes for your resident agent address.

3. Veil-piercing does not depend on the type of entity that you are. Veil-piercing occurs when your LLC is sued, and the plaintiff seeks to attack the personal assets of the LLC owners. In order to do this, a judge must do what's called piercing the corporate veil.

Piercing is not a simple process. In most states, a plaintiff must show that several factors are present in order to pierce a corporate veil. These include:

• Ignoring corporate formalities


• Commingling corporate and personal funds


• Zero capitalization of the LLC


• Fraudulent siphoning of LLC funds to the owner after a lawsuit is initiated or threatened


• Other "unjust" behavior on the part of the LLC owners

Usually it takes at least two or more of these factors to be present to pierce the corporate veil.

4. See above.

5. Yes, you can form an LLC yourself. There are three different "levels" of LLC formation, at various costs.

One, you can hire an attorney, spend a few thousand (plus state filing fees), and have an LLC formed.

Two, you can use a service like Legalzoom, and it will cost a few hundred (plus state filing fees).

Three, you can download Articles of Organization forms for free, fill them out yourself and file directly with Texas.

In terms of pass-through taxation, you simply check the box. If you use Legalzoom to form your LLC, there is a question they ask on their questionnaire asking if you want to be taxed as a partnership or a corporation.

For pass-through taxation, select "partnership" (or as a single member LLC, "disregarded entity").

Just as a side note, many people confuse disregarded entity with veil-piercing. They have nothing to do with one another.

Disregarded entity is a term used by the IRS, which states that your LLC does not have to file a separate informational tax return. Instead, your disregarded entity LLC will record your income and expenses on your Schedule C, making your tax preparation much simpler.

I have not seen any evidence that the corporate veil of a single member LLC treated as a disregarded entity is more likely to be pierced than other LLCs.

6. The advantage of Legalzoom is that they complete the LLC formation documents for you, rather than trying to figure out the documents yourself.

In addition, with the Legalzoom Gold Package, you get a CD with many useful forms, such as employment agreements, stock transfer forms, and others. If you paid an attorney to generate these documents, you'd spend a lot more than what Legalzoom charges.

If you purchased these documents from another provider, again, you'd probably end up paying as much as your paid Legalzoom.

You also get a free copy of Microsoft Office Accounting Express 2008 with a Gold or Standard Legalzoom package.

In the end, you're going to need to use these documents in the course of your business, so it makes sense to get it all done at the beginning, at the lowest overall cost.

Single member LLC

by kalia
(Dallas,Texas,USA)

I will be the only one member in my LLC.
Means only owner and only employee.
I have one full time job as well. My LLC would be IT staffing and consulting company, so I don't need any employee and even I don't have to work daily.
I am in Texas and wanna form llc in texas profit will be 50k

questions

1.Do i need to take salary every week ?

2.how about tax if i have to take salary and profit is 50k

3. How many different kind of taxes i have to pay, where and when ?

4. what if my LLC dont do any business in fiscal year

5.How hard to close LLC

Thanks

Answer

Here are your questions, answered in order:

1. As a single member LLC owner and sole employee, you do not need to take a salary every week. In fact, you don't take a "salary" at all--you simply take profits from the LLC as you earn them. This means you could pay yourself every day, or only once per year.

2. If your LLC earns a $50,000 profit, then what will happen is this $50,000 profit is recorded on your personal federal income tax form 1040, on Schedule C (I'm assuming here that you have chosen to have your LLC taxed as a disregarded entity). In addition to federal income tax, you will also have to pay self-employment tax. You calculate self-employment tax using Form SE on your 1040. Self-employment tax is the self-employed business owner's equivalent to an employee's Social Security and Medicare withholding taxes. Instead of withholding each pay period, as the owner of a single member LLC, you pay your self-employment tax at the end of the year with your federal income taxes.

Because you live in Texas, I'm not going to discuss state income taxes, as Texas does not levy income taxes.

3. As I said above, a single member LLC's owner will pay federal income taxes, as well as self-employment taxes. In addition, you will have to make quarterly estimated income tax payments.

Some people think that making quarterly estimated tax payments is something employees do not have to pay. That is incorrect. As an employee, your employer withholds federal and state (except for Texas, of course) income taxes from each of your paychecks and sends the money to the IRS each quarter. In other words, your employer is an unpaid tax collector for the IRS.

As the owner of a single member LLC, you don't have an employer to withhold your income tax payments, so you have to do it yourself.

The form for calculating your quarterly estimated taxes is Form 1040-ES (for EStimated). If you make a mistake and underpay your estimated taxes, you will be liable for interest plus a penalty of 1% per month.

TO avoid penalties for underpaying quarterly taxes, you must pay the lesser of:

A. 100% of last year's taxes (divided equally among the four quarters); or

B. 90% of what you end up owing at the close of the current tax year.

4. If your LLC doesn't do any business during the year, then it will not have any income or expenses to report. You simply fill out your Schedule C with zeros. It will be a very easy form to complete!

5. Closing an LLC in Texas is not difficult. The formal name for closing an LLC is called "dissolution". In Texas, you file a Form 605 Articles of Dissolution. The filing fee as of 2008 is $40.

Other states will have similar forms (though with different names, form numbers, and filing fees).

You can dissolve your LLC at Legalzoom for a fee (in addition to the filing fee). Using Legalzoom, scroll to the bottom of the page and look for "Dissolutions" on the right side, under "Additional Business Services".