LLC and business over the Internet

[IanTetlow]

Thinking of creating a LLC to provide web services (web design and development) over the Internet, I am wondering if I will have to register in each state where I will be looking for potential clients.

Thank you

dda

[Dalen]

Nope, just the state you want your company to "reside" in. You may have to file as a business in each state you provide service in, but not your legal filing (some states want to know who is selling to their residents). You can use someplace like www.incorporate.com to file too (there are hundreds of these companies to choose from, btw).

You may want to speak with an attorney about filing for an LLC; many people in your industry are refraining from filing. I have several clients performing web services who stayed sole proprietors and only filed for a federal id number for billing purposes. Just an FYI.

Good luck.

[IanTetlow]

Thank you very much for replying.

What do you mean by “file as a business in each state”? Is it a time consuming and costly operation?

Also, you are mentioning that many people in my industry are refraining from filing an LLC. Do you have an idea why?

dda

Originally Posted by eightmanagement

Nope, just the state you want your company to "reside" in. You may have to file as a business in each state you provide service in, but not your legal filing (some states want to know who is selling to their residents). You can use someplace like www.incorporate.com to file too (there are hundreds of these companies to choose from, btw).

You may want to speak with an attorney about filing for an LLC; many people in your industry are refraining from filing. I have several clients performing web services who stayed sole proprietors and only filed for a federal id number for billing purposes. Just an FYI.

Good luck.

[Usma]

1.) Decide a name for your company first. You will need to get approval from your states ,"secretary of state", look on the web for your states web site. Once this is approved they will hook up with you to collect state taxes. They will do a name search to make sure no other company in your state uses the same name and also if your business is legal in that state etc.

2.) After your approved tell the IRS your company name and get your TaxID (not necessary if your a sole prop' etc) they will tell you what form you will need to file during tax time.

You may want to see if you really can make some money first before you register a company. If you don't expect to be sued or go public you do not need an LLC or S-Corp.

[Dalen]

If you're just providing web design and development, only worry about your state. If you're doing any software development or network jobs, you'll need to check out the state department of commerce's policies on business in their state. Bottom line, read up on your state's tax laws.

With regards to sole proprietorships vs. LLC, many web designers are finding it to not be cost effective to file an LLC registration. You don't need the protection that it provides nor the ownership division. Also, it will cause you more headaches when you file your personnal taxes. You should file for a federal id number for billing purposes; just adds professionalism to your business. They will send you a quarterly form to file your witholding tax (because you file they think you have employees), just fill it out as 0 and send it back. When they look at your year end personnal return, they'll see you don't have employees.

[! Hulio !]

My dear dda, some thoughts about not needing protection that an LLC provides:

If you don't plan to apply for a business credit account of any kind,

If you don't mind using your personal credit to personally guarantee a credit account for business purposes,

If you think that, if business is slow and the debts mount, the creditors won't call you at home, sue you personally, file a judgment against you, enforce that judgment by either putting a lien on your home or car or garnishing your income,

If you don't mind it if a customer decides to sue you personally for loss of data or productivity if your design/development didn't go as planned or took too long for their taste,

If you never plan to succeed to the point of having an office, an office where someone could possibly slip and fall, bringing on a liability claim,

Then no, you don't need the protection an LLC provides.

Businesses are like marriages--pay now, or pay later. But either way you pay. The goal is to keep as much of what is yours in the end. (And I'm a happily married business woman by the way ;-)