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10/27/2014

Limited Liability Corporations

Each of us recently created a Limited Liability Corporation (LLC) in an effort to adapt to Jason’s job loss. We looked at our areas of expertise and created LLCs to offer these skills as consultants. We chose the LLC format because there were several benefits to this type of business:

  1. Personal assets are protected if the LLC incurs debt or is sued. And on the flip side, the business is protected if we are sued for personal reasons.
  2. Less recordkeeping than other business types.
  3. Taxes are paid through personal income tax forms and only the profits are taxed.
  4. Profit only occurs if the business income is greater than business-related expenses. That means the money used to pay for business-related expenses is not taxed. Those expenses can include the business use of your home (mortgage, insurance, utilities), car, cell phone, etc.

 

How do you create an LLC? Easy!

  1. Pick a name. Ok, this was actually the hardest part of creating an LLC because it needs to be an original name in your state. In addition, the name must include the term Limited Liability Corporation, LLC, or L.L.C. You can check the originality of a business name in Wisconsin here.
  2. Create the LLC through the appropriate state agency. In Wisconsin, this costs $130 and can be done online at the Wisconsin Department of Financial Institutions.
  3. Apply for an Employer Identification Number (EIN) through the IRS.
  4. Open checking and credit card accounts for the business. With Summit Credit Union, if you qualify for a credit card, you are not charged any fees for opening a business checking account. Call to make an appointment and bring a copy of the LLC’s Articles of Organization (from registering with the state) and the EIN number.

That’s basically all that is needed to create an LLC in Wisconsin. But we aren’t lawyers or tax accountants, so do your own research on this subject! A good resource for deciding what type of business structure might work for you is the U.S. Small Business Administration. Another helpful resource is the University of Wisconsin-Madison’s Small Business Development Center

Comments

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Good for you two! Now, let's let the cash flow in begin!!

I know, right?!?!

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