Busy day (when is it ever not?)
Today I got my first 2 LLC formations started. It’s quite fun to be able to call yourself whatever title you want and have it be all official on government documents.
Normally one LLC formation is hard enough with all the llc form that you have to understand and figure out. Not to mention planning ahead for the particular LLC tax options.
If you’re not familiar with an LLC is (it stands for Limited Liability Corporation) and how it differs from other options check wikipedia.
First up I’m not a lawyer or an accountant so you should research all the options as they best apply to your unique situation.
Like many entrepreneurs starting, prior to now I’ve been doing everything through my personal finances, and using Amex Platinum with it’s kick ass reporting to help make sense of everything at the end of the year.
My advisers have all basically told me is … being a entrepreneur is enough of thrill seeking as it is without bringing in financial and legal bungee jumping. As sadly In this day and age it doesn’t seem if but rather when some legal suit will happen. Supposedly 91% of all lawsuits in the world happen in the US and it pays to be prepared so that not everything that you’ve worked so hard for can be taken away.
My Life before the LLC
I know I’ve needed to do this for awhile but other things were always more important. Like building the team, building the products, research. I was deciding first just how to segment my empire. My situation is fairly complicated as I have so much going on:
- software development,
- marketing services
- launch video consulting
- local business SEM consulting
- affiliate sales
- several product lines nearing completion.
Honestly I don’t think I’ve ever worked so hard in my life as these days. Primarily as the money I get from my consulting and affiliate sales goes right back into (and often way more) into development of big half year or more projects like the webinar replay service Intellinar.com, because that’s how I roll.
No Employees just Awesome Outsourcers..
Across the board I use contractors outsourced for everything, and my team grows from 7 core to about 14 depending on what I need done. I’m very skilled in the outsourcing jedi arts with about 50K of personal projects in the last couple of years that easily could have cost $500K to 1.5Million if I had done the same thing in Los Angeles – I know as I had a previous life at interactive agencies and startups. For comparison, most my team runs about $3.75/hr, the most high end (and he has a very esoteric skill) is $30/hr. The same skills in Los Angeles would have been $80K to $200K/yr respectively.
What’s more than just that, I’m also quite proud that I have almost a perfect 100% feedback rating on Scriptlance, Elance, Odesk. and I have some great teammates I consider peers, and a I can’t tell you how exciting it is to have your dreams literally made while you are sleeping. Since outsourcing is all the range with John Reeses Outsourcing Force, I’ll be covering how I achieve this in the upcoming days, probably starting with my RAPID Model, which is how I organize my team. Coincidentally this graphic was outsourced, just this last night by a guy I’d never met for about $25 and he was done by tonight.
Anyway, for all that, historically all this a 1040 plus a Schedule C for itemized deductions has been the best fit. Schedule C. TurboTax’s guide help make the process much easier, and every year it gets a little bit more familiar, as TurboTax online and Amex Platinum with tags are a powerful combo.
Looking forward I realized I’d start have to hiring some real employees and getting merchant accounts, working on establishing independent business line of credit, and of course keeping the paperwork and tax liabilities as low as possible.
I decided on LLC’s for the various ‘edges’ taxed as S Corps and C Corps for the consulting and Marketing shared by all.
Figure $700 per LLC
Once I decided that I needed to choose between Incorporate.com, Incorporation.com and Legalzoom.com. Having no clear preference, Legalzoom was mentioned at the Magic Bullet Seminar so I decided to give it a try. I doubt that one has a huge price advantage over the other but I didn’t check.
For the 2 LLC’s it about $700for the 2 on the least expensive and slow plan, they have 3 options. Normal $150, Regular $250, Fast + Deluxe $350. BUT real up front costs are about $200 more than that for the fees of getting tax ID number and other stuff. I was a bit surprised that they chose not to make this and the other fees shown until you are basically at the checkout step.
That covers the Federal side, Also there are a whole nother set of fees that have to be paid to the state which also aren’t included. They don’t tell you this until after you’ve paid and you get an email saying do it or do it with consequences. Now I know that they don’t have to do. I just don’t think they do a good job of managing expectations. More on that in a minute.
The LegalZoom Selling Machine
As a person who studies marketing everywhere Legalzoom is TOTALLY a selling machine. They have a low barrier to entry, they get you hooked and invested by all the data you put in like 7 steps before showing you the price you’ll pay. On the user experience, with all the odd options to choose from, nice little context helpers and little social proof at the top reinforcing how “easy it is” . They know they have a captive audience who really would be rather doing just about anything else, but like taxes know they have to do.
At the end they have a stunning amount of almost invisible upsells all over the place, speedy service, member ship options, digital CD’s with training, common form. lead gen for half a dozen different other services, merchant cards, amex credit cards, etc. I kinda felt like had been asked if I wanted fries, extra soda, a shake, a salad, a soup dish, a discount next time, and a tickets for two for tahiti if I acted now.
Anyway having to got through the process twice made me even more aware of the massive marketing machine in action. I felt good at the end, thinking it wasn’t nearly as bad or as complicated as I thought it was going to be. Especially for internet entrprenuers, there is no buildings, less inventory, no salaried employess generally unless you really want to be called BOSS.
The marketing didn’t end once I got through. I just got an email from the business department saying that Nevada actually has a bunch of other stuff. Look at this well crafted email: Scarcity, Consequences, We’ll do it for you.
As you may already know, Nevada requires you to file an Initial List of Members and Managers by the end of the first month following your LLC registration, or face a fine of $75. Keeping your LLC in good standing with the state is extremely important. That’s why LegalZoom has introduced a new service to take care of this time-sensitive requirement for you.
For your convenience, LegalZoom will complete your Initial List of Members and Managers and submit it directly to the Secretary of State. The cost is $35.00, plus a $125 state filing fee and $200.00 for the business license fee ($360 total). It’s the fastest, easiest way to ensure a timely, accurate filing. To take advantage of this new service, simply respond to this email or call us toll free at (888) 381-8758.
While they don’t make all the $360, it did surprise me to have to shell out another $360 after spending about that amount on the initial LLC formation. Would have liked a bit of aheads up!
Anyway if you know you have to take the leap!
now this was just one of the major mountains today. What’s a company without an address? For that let’s take a look at virtual Post Office Boxes.