Looking for CPA to help set up LLC | Bloggers Lair | Yakezie Forums

I can't help, but I am curious to hear after you set this up whether it works for you. I was under the impression that LLCs were pass-through for tax purposes, so would there be a benefit to setting up in a tax-free state (since you would presumably pay taxes in the state you live anyway)? 

A lawyer, not a CPA should be setting up an LLC (unless the CPA has extensive legal experience). A good corporate/business lawyer (you can just do a search for your town) should be able to set up an LLC in any state. It's just a matter of sending the paperwork to the appropriate office and reading up on a particular state's policies. My lawyer helped me set-up an in-state and out-of-state LLC.

A CPA would be needed to set up accounting, although it's not required. You can use a free online business accounting service (I use Wave Accounting) for a simple operation, or QuickBooks for something more complex (you may want somebody to show you how to use QuickBooks if you don't feel like reading pages of guides).

My CPA here in New York recommended that I use a lawyer to set up my LLC… it wasn't as expensive as I thought it would be but still wasn't super cheap either.  I found out later there are some state orgs that help low profit companies get stared filing so thats an option too if available.

Also, try not to get "chatty" with your lawyer… I had mine help me with something, did a lot of BS'ing with him about kids and stuff (we both had kids recently) and got a huge bill for all of his time.  

The College Investor said:

That's a tough one too because most states tax you in where you do business, not where you incorporate or setup an LLC.

For example, since I blog from home in California, even if I setup a Nevada LLC, I'd pay California taxes.  

Theoretically, if I had a way to pass all payments through Nevada, I could get around this, but not worth it unless you're Google.  

As Wojo mentioned above, a LLC (or an S-corp) are "flow through entities" for tax purposes. This means that net income flows to your personal (1040) return and is taxed the same as wages/salary would be. If you "had a way to pass all payments through Nevada" you'd still have to pay CA personal income taxes on the net income because you are a resident of CA and pay CA personal income taxes.

The main benefit of incorporating isn't so much to change your tax structure. Going from a Schedule C to a LLC or S-Corp should generally have no impact on your tax liability (just remember not to incorporate as regular C-Corp or you're opening yourself up to double taxation!). Rather, incorporating gives you extra protection personally. Meaning, if you get sued as a sole proprietorship (Sched C) then you and your personal assets are exposed. Going to a LLC or S-Corp gives you protection – only the corporation would be liable.

retireby40 said:

A little more background. I met him at WDS. 

He is a Canadian, but he has an online ecommerce business selling stuff in US and Canada. 

He has been traveling the world and is planning to continue for a while. 

So no set address, no state where he mainly does business. I have no idea how he would do this. 

I'll let him know you guys recommend a lawyer. 

Maybe he just need to set up an LLC in Canada? 

Okay, here's the basic deal with international taxes.  If you make money in the a country but don't live there, you have to pay the country's income taxes on it.  In some countries of residence, (like the US, the jerks), you'd ALSO have to pay income taxes in your country unless there is a tax treaty.  If a tax treaty exists, you fill out the correct forms and report your income accordingly.

If you have an internet-based business, it is considered that you aren't actually making money all over the world but are in the country that you are a citizen of and have permanent residence in, so you don't have to worry about it.

There would be ZERO advantage to him setting up an LLC here.  He'd have to establish permanent residence to possibly avoid Canadian levels of taxation–and at that point, choose Bermuda or somewhere without income taxes!!!!!