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Setting up an LLC

 


DAVE619  (D 29384)

May 20, 2010, 1:45 PM
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Setting up an LLC Can't Post

Who has experience doing this, what benefits will it give you as a tandem instructor? Prices? & has anyone ever been in or seen a situation where having an LLC has helped someone out?


DiverMike  (C 40024)

May 20, 2010, 2:06 PM
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Re: [DAVE619] Setting up an LLC [In reply to] Can't Post

If you correctly set up a LLC you will limit your personal liability. This is useful for the millionaire playboy who just wants to teach tandems. (Haven't met one yet). You would have to be a consultant to your LLC and the dropzone would have to pay your LLC directly. They would issue the 1099 to your LLC and your LLC would issue the 1099 to you. All contracts would have to be written between the LLC and the dropzone.

It is a lot of work that can be done wrong several ways. If you personally accept payment from the DZ, you can be sued as an individual and the corporate veil of the LLC won't protect your personal assets.

Your mileage may vary. It is a state to state thing. Don't worry about it unless you are really rich (Deep pockets) and want to avoid being named in a lawsuit.

I set one up as a SCUBA instructor, but it wasn't worth the hassle. If you don't treat the LLC as a real corporation, you won't benefit from the protection.


Andy9o8  (D License)

May 20, 2010, 3:13 PM
Post #3 of 18 (1570 views)
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Re: [DiverMike] Setting up an LLC [In reply to] Can't Post

Good summary; but as an attorney I think it's more worth it than you do. I won't give legal advice here; but in many (not all) US states, you often (not always) have more protection against losing your house (and sometimes some other assets) to a judgment if you're married (and the house/assets are in both your names) than if you're single.

To the OP: There are lots of variables that go into making this decision; more than I've specified here. DEFINITELY consult an attorney in your state. I'm not necessarily saying do or do not set up the LLC; I'm just saying that if you make the decision without full education of the pros and cons - and consulting an attorney is the best way to get that education - you're doing yourself a disservice.

As DiverMike suggested, even if you do set up an LLC there are certain CRUCIAL things you must do, and refrain from doing, to avoid having a plaintiff "pierce the corporate veil" to get at your personal assets. IMO, only an attorney can adequately advise you re: this.

Finally - DO NOT take legal advice from ANYONE who is not an attorney. NO EXCEPTIONS, period.


(This post was edited by Andy9o8 on May 20, 2010, 3:15 PM)


DAVE619  (D 29384)

May 20, 2010, 4:01 PM
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Re: [Andy9o8] Setting up an LLC [In reply to] Can't Post

jesus, maybe I will switch to video...


wolfriverjoe  (A 50013)

May 20, 2010, 4:06 PM
Post #5 of 18 (1541 views)
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Re: [DAVE619] Setting up an LLC [In reply to] Can't Post

In reply to:
jesus, maybe I will switch to video...

Not necessarily.

As has been said, doing it right has certain benefits.

Doing it wrong negates some or all of those benefits.

Whether or not those benefits are worth the cost and effort of doing it for you is a question best answered by an expert.

I looked into doing it as a rigger and made the decision that it wasn't worth it for me.

YMMVSmile


tdog  (D 28800)

May 20, 2010, 4:26 PM
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Re: [DAVE619] Setting up an LLC [In reply to] Can't Post

I have set up a few LLCs over the years. Five to be exact personally plus a few for friends... Avian Soul, LLC is my skydiving entity.

Costs are very minor if you do your research and set up the forms correctly. Less than $50 for the last one I set up. The hidden costs are in the tax returns for the entity if you don't do them yourself... The ones I don't do, the accountant gets $1200 per LLC just to make the schedule K and K1s. If you use Turbotax you will need to pay more for the advanced tax tools to do your own K and K1s. (Unless you want to put it on a schedule C as a disregarded entity).

Get a separate bank account for the LLC... All skydivng earned revenue goes thru that bank account... Plus do other things, as your lawyer will tell you, to keep it a legit business.

One bit of advice. When you register with the secretary of state, you WILL be added to every mailing list of every company trying to sell "your new business" business cards, banking, insurance, etc. Thus DO NOT put a cell phone or home phone on those documents and DO NOT put an address where you want spam (email or snail mail). It might be worth a post office box for the first year on your SOS documents, that you take the junk mail to the recycling bin quarterly, but I just got good at throwing away the paperwork and putting my office address on all the SOS documents.

But as the other poster said, don't take ANY advice from anyone other than a lawyer, so PLEASE put your cell phone on all the documents and enjoy the phone calls. ;-)


(This post was edited by tdog on May 20, 2010, 4:29 PM)


AggieDave  (D License)

May 20, 2010, 5:35 PM
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Re: [Andy9o8] Setting up an LLC [In reply to] Can't Post

This is something that I really don't know much about and am curious about some broad ideas: instead of setting yourself up in a LLC, could you place your assets in a trust with you as a listed member (or whatever its called)? Would that provide some sort civil protection from the concerns stated previously in the thread?

I apologize if the question is so off base to be laughable, like I said, its not something I'm knowledgeable in (hence the question).


apt3studiodiver  (B 33514)

May 20, 2010, 9:55 PM
Post #8 of 18 (1453 views)
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Re: [DAVE619] Setting up an LLC [In reply to] Can't Post

You can also set up an LLC, and with an additional form use the taxation benefits of an S-Corp. This is how my LLC's are setup. Cant really say what those benefits are actually because I use a tax attorney for everything. Unsure

Go with Andy9o8's advice, get educated then get advice from a pro.


Andy9o8  (D License)

May 21, 2010, 6:22 AM
Post #9 of 18 (1405 views)
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Re: [AggieDave] Setting up an LLC [In reply to] Can't Post

In reply to:
This is something that I really don't know much about and am curious about some broad ideas: instead of setting yourself up in a LLC, could you place your assets in a trust with you as a listed member (or whatever its called)? Would that provide some sort civil protection from the concerns stated previously in the thread?

I apologize if the question is so off base to be laughable, like I said, its not something I'm knowledgeable in (hence the question).

I hesitate to answer in too much detail simply because I'm not a Texas lawyer, and - mainly for your good - I don't want to give too much specific legal advice over the internet. And decent legal advice on a somewhat complex subject (such as trusts) really can't be given in nutshell form in a blog like this.

So, the longer answer of course is "talk to your instructor"; but the shorter answer is that the "sheltering" of assets - without more - can sometimes be inadequate to protect them against creditors reaching through the legal entity to get at them. Trusts can be complicated animals; there are so, so many different flavors of them. Your best bet is to have a sit-down with a Texas attorney who really, really knows his shit about trusts in particular.


DiverMike  (C 40024)

May 21, 2010, 6:23 AM
Post #10 of 18 (1401 views)
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Re: [AggieDave] Setting up an LLC [In reply to] Can't Post

In reply to:
could you place your assets in a trust

I hesitate to give accounting advice since I am not an attorney Tongue but the answer is "no". Putting your assets in a trust does not protect them especially if you are the administrator of the trust. The primary function of a trust is estate planning and/or what to do with your assets if you become a vegetable.


DiverMike  (C 40024)

May 21, 2010, 6:32 AM
Post #11 of 18 (1395 views)
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Re: [Andy9o8] Setting up an LLC [In reply to] Can't Post

In reply to:
Good summary; but as an attorney I think it's more worth it than you do.

I agree I understated the worth. I didn't take into account two key components of the skydiving industry 1- it is prone to lawsuits, 2 Drop zones are prone to declaring bankruptcy.

I doubt many instructors realize that they might have to give back their earnings for the last 90 days to a secured creditor if the DZ files chapter 11. Talk about insult to injury.

And I completely agree that nobody should be taking my advise on this and should consult an attorney. If anything went wrong by following my advise my only response would be, "it's your fault for trusting me."


Premier LouDiamond  (D 25931)
Moderator
May 21, 2010, 6:53 AM
Post #12 of 18 (1388 views)
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Re: [AggieDave] Setting up an LLC [In reply to] Can't Post

In reply to:
This is something that I really don't know much about and am curious about some broad ideas: instead of setting yourself up in a LLC, could you place your assets in a trust with you as a listed member (or whatever its called)? Would that provide some sort civil protection from the concerns stated previously in the thread?

I apologize if the question is so off base to be laughable, like I said, its not something I'm knowledgeable in (hence the question).


Dave, by chance are you asking this in regards to class 3 firearms?


AggieDave  (D License)

May 21, 2010, 1:44 PM
Post #13 of 18 (1327 views)
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Re: [LouDiamond] Setting up an LLC [In reply to] Can't Post

No, no Class 3 stuff, just in general. I've read a bit about trusts in regards to SBR/SBS weapons and the such, but I was thinking about other things of value.


377  (F 666)

May 21, 2010, 3:01 PM
Post #14 of 18 (1310 views)
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Re: [Andy9o8] Setting up an LLC [In reply to] Can't Post

Andy is right, a lawyer can guide you best, but most jumpers I know cannot afford or refuse to spend $200-$700 an hour for anything... with the possible exception of bulk tunnel time or certain similarly priced adult activities.

Consult with a lawyer if you can afford it, but if you can't then check out Nolo Press. They have some really well written do it yourself legal books including some on forming your own LLC or corporation.

In my experieonce as a lawyer, too many people who set up their own LLC or corp casually end up blowing the protective shield by failing to follow business formalities that keep you and the corp separated. Those formalities seem dumb and bureaucratic but they really are critical if you want to protect your personal assets.

377


(This post was edited by 377 on May 21, 2010, 3:04 PM)


lifeisshort  (D 26637)

May 24, 2010, 10:10 AM
Post #15 of 18 (1224 views)
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Re: [377] Setting up an LLC [In reply to] Can't Post

If it were me wondering about an LLC and the advantages and disadvantages here is what I would do.

I would go to an accountant and seek advice about tax advantages or disadvantages to LLC and the filing and assc business cost, because you could possibly get more write offs - potentially making it worth the hassle.

I would ask said accountant about the need for a lawyer to set it up and whom they would recommend.

However, in my current business, I had my accountant set up my Corp., and then my attorney just had to review it. It was cheaper.

my accountant makes sure that I file all the correct paperwork with the SOS and that way I do what I have to in to the state and cover myself. I am in a pool building business lots of liability here too...

Anyway thats just what I would do.


Premier LouDiamond  (D 25931)
Moderator
May 24, 2010, 12:16 PM
Post #16 of 18 (1191 views)
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Re: [DAVE619] Setting up an LLC [In reply to] Can't Post

There are a few good books out there that you can look into to help you decide what might be best for your situation. You will eventually need to go to a lawyer and or an accountant to help set up what ever you decide is right for you.

There are two books that you should be able to find anywhere that should help narrow down what everything means and what it does and does not do for you in simple terms.


Incorporating your business for dummies


Small business kit for dummies


You can probably find one or both at the local library if you don't want to buy it.


jumperterry  (D 23167)

Jul 23, 2010, 4:22 PM
Post #17 of 18 (1032 views)
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Re: [Andy9o8] Setting up an LLC [In reply to] Can't Post

Andy9o8:
In reply to:
Can you recommend a good lawyer in Northern VA for setting up an LLC or acquiring some type of protection for an AFF instructor?


Andy9o8  (D License)

Jul 23, 2010, 5:54 PM
Post #18 of 18 (1011 views)
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Re: [jumperterry] Setting up an LLC [In reply to] Can't Post

In reply to:
Andy9o8:
Can you recommend a good lawyer in Northern VA for setting up an LLC or acquiring some type of protection for an AFF instructor?

Best I can do is tell you that in Virginia, like most states, each county has its own local Bar Association, and each bar association has a "lawyer referral service". Start there. For example, if, say, you're in Arlington County, Google "Arlington County Bar Association", then find the link to "Lawyer Referral Service". Then give them a call.



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