Do I really need to file for an LLC to do business?

[juan917]

Need to pay $500 to continue having an LLC in my state. Am not sure if it's worth it

 

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[juan917]

Well I paid for it

 

[Scot]

Lol ok then

 

[Trud09]

I will chime in, even though I am not a lawyer (not legal advice, seriously don't take legal advice from strangers on the Internet) and it seems to be too late. Possibly for future reading and others benefit. You don't "need" an LLC, but there can be some benefits.

Legal:
If you don't follow the formalities to keep it an LLC, there is no use for it. If you get sued and you haven't followed the formalities (differ by state so I can't comment even on what they are) then there was no point. If you have followed the formalities, and you are in the right state (or formed it in the right state) then you will be seen as 2 separate legal entities. Your LLC explodes on someone, they can only sue the LLC. Someone falls in your house and sues you (once again varies by state) they can't foreclose on your business.

Tax:
If you don't form an LLC you are running business as a Sole Proprietor. This means all your income from your business (in most businesses) is subject to self employment tax. There are ways through changing the way the IRS views your business through an LLC that can reduce self employment cost.

I recommend you read up on both of those things if you are DIY person or speak to a competent professional. If you enjoy reading legalese then have some fun.

EDIT: This isn't Tax advice either. Don't take tax advice from random people on the Internet either.

 

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[Mr. Gray]

My question is then why are LLC filings priced differently in each state in the U.S.?

 

[Scot]

Same reason why sales tax is different state to state. Same reason why some states require businesses licenses and some don't.

Magic.

 

[Trud09]

My question is then why are LLC filings priced differently in each state in the U.S.?

LLC's are a state level oversight. Each state has decided what it costs them to oversee and create each new entity. Similar to what Scot said above. Different states get their revenue through different methods.

 

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[Mr. Gray]

LLC's are a state level oversight. Each state has decided what it costs them to oversee and create each new entity. Similar to what Scot said above. Different states get their revenue through different methods.

Thank you, but how do the states decide on the price for an LLC?

 

[Trud09]

Thank you, but how do the states decide on the price for an LLC?

I would think each state's Secretary of State has some say in it. Ohio changed the filing fee from $125 to $99 and we have no ongoing fees. Other states have an initial filing fee and a yearly fee.

Possibly ask your Secretary of State's office why the fee is set where it is? I am not sure if it is decided by state Congress, but someone along the lines decided to set it where it is. The fun of Politics

 

[Mr. Gray]

I would think each state's Secretary of State has some say in it. Ohio changed the filing fee from $125 to $99 and we have no ongoing fees. Other states have an initial filing fee and a yearly fee.

Possibly ask your Secretary of State's office why the fee is set where it is? I am not sure if it is decided by state Congress, but someone along the lines decided to set it where it is. The fun of Politics

Thank you,

I live in Iowa and it's only $50, which I'm grateful for. I just couldn't fathom paying $500 - $1000 to file when other states have $50 filings.

 

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[OldFaithful]

Not only do different states have different fees for setting up your LLC, they also have different tax benefits. States tax business differently, so there is often a substantial financial benefit to using an LLC from another state, which is entirely acceptable.

 

[lowtek]

If you run into trouble (get sued, screw something up, etc.) then the LLC can shield your personal assets from the fallout of the lawsuit.
There are also some powerful tax benefits to the structure, depending on how you do it. Definitely pay an accountant $50 to sit down for half an hour to get it explained to you.

Since you're talking about renewal, I'm guessing you already have a business.

If you didn't have one, I would say dont' bother. But if you do have sales and customers, then it's a good idea.

 

[Mr. Gray]

Not only do different states have different fees for setting up your LLC, they also have different tax benefits. States tax business differently, so there is often a substantial financial benefit to using an LLC from another state, which is entire acceptable.

But, to use the LLC in a differnt state you have to have a agent their correct?

Also, what is the best state to have an LLC in?

 

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[OldFaithful]

But, to use the LLC in a differnt state you have to have a agent their correct?

Yes, a registered agent is required and there are already numerous options. There are dedicated "registered agents" in most states, and an attorney could do it for you too, though the attorney might be more expensive. In all honesty, I've not used either so take that for what it's worth.

Also, what is the best state to have an LLC in?

Google is your friend!
https://www.myllc.com/which-state-to-form-llc.aspx
https://en.wikipedia.org/wiki/Limited_liability_company
etc.