Carole" <reyners[at]comcast.net> wrote:

- quote -

I don't see the advantages to forming an LLC in your case.
First off, you automatically incur and $800 franchise tax in
California that gets you nothing in return, except the right
to claim the limited liability.

But, what is the liability limitation worth. It is not a
blanket shield against any and all possible claims against
the business. An LLC can buy supplies, incur rents, etc.
and after losing money on operations, be unable to pay its
debts. The LLC will probably shield the members from
personal liability for these things.

On the other hand, suppose one of the garage doors falls off
and damages the owners car or injures some of his family.
If the owner can demostrate that the door was not properly
hung, the LLC member cannot avoid liability for his actions.
If he hires someone else to do the work, he might escape
personal liability but if he was directly involved in the
project, he will be held responsible.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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California LLCs are subject to an $800 annual fixed-dollar
minimum tax, plus a fee imposed on a sliding scale according
to "total income." The fee does not apply until "total
income" (gross receipts with some adjustments) goes over
$250,000, so it would not affect you, but the $800 minimum
applies to all LLCs.

As David Woods pointed out, an LLC is a limited liability
COMPANY, not a corporation. However, like a corporation, it
provides limited liability to all of its owners. If your
husband's business carries a risk of lawsuits or other
claims, you may be wise to consider forming an LLC or a
corporation to insulate your other assets from potential
claims of the business's creditors. However, that is a
legal question, not a tax question. I can't think of any
tax advantage you could gain from incorporating or forming
an LLC for your businesses.

Katie in San Diego

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David Woods <davidwoods[at]verizon.net> wrote:
- quote -

But it can elect to be taxed as one.

Stu

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Since no one mentioned it you will need to:
- file with the State, less than $100
- pay an annual tax of $800 to the state
- refile every 2 years with the state $20

Depending on the city/county you live in you may be required
to pay a business tax in that locality.

---
f

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"Carole" <reyners[at]comcast.net> wrote:

- quote -

Beware when people make suggestions regarding topics as deep
as choice of entity type, without putting the suggestions in
writing to you

Tax, reporting, and liability issues are just a few of the
myriad facets of choosing a type of business entity

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"Carole" <reyners[at]comcast.net> wrote:

- quote -

I'd say first make sure you understand what an LLC as it's
not a corporation.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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"Carole" <reyners[at]comcast.net> wrote

- quote -

A two member LLC is treated as a partnership for tax
purposes, so there is another return to file, and most
likely fees to pay to the state.

The partnership profits are subject to income tax AND
self-employment tax, same as if you filed them under a
Schedule C.

I doubt that the costs to form and maintain a LLC are worth
any preceived or actual benefits.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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My husband has decided he can't take teaching in the
California schools and to finish his 4 years to retirement
is working installing garage doors. His income will be in
1099's and W-2's, and I also have 1099 income. Someone
suggested to us that we should have an LLC, but after
researching this I'm not convinced it would be worth it
because our income will probably not go over $50-60,000. (I
am already retired and we have other income.) What do you
say?

Carole

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >