Starting a Business

[asphalt]

I am wanting to start an llc mainly for the protection it could give, I will be selling custom software in the near future and think this may help limit my risk.

Does anyone have any info on forming an llc through companies like legalzoom.com or http://www.sageintl.com/

I am just beginning my research into forming a company so any input would be appreciated.

Thanks

[Shawn]

Don't form through a company. It only costs around $100 to register directly with your state -- all you do is print out a simple form and enclose a check.

Just spend 5 minutes to save yourself a few hundred.

[asphalt]

Shawn, That was my original plan I have the forms. Some of this legal stuff get confusing.

[paul]

Keep in mind that each entity like an LLC or Corp. has to file their own tax return with deadlines and requirements which may not be the same as those of a 1040 even with Schedule C. I would delay until the income from the business will pay for a tax advisor/bookkeeper. If the business doesn't work out, you will be on the hook to complete those tasks on your own. and not be able to afford the professional help.

[asphalt]

Paul I thought about that also.... but I am worried about someone downloading my software installing it on their server and my software being blamed for data loss of something of that nature. It is highly unlikely but that still concerns me with my house and everything else being at risk.

[Cutter]

If you are really concerned about asset protection you need to get a lawyer to do it all for you. If you do one or two things wrong that can basically nulify the liability proctection of the LLC, corporation, etc. -- which you wouldn't find out until it actually ended up in court.

[paul]

which you wouldn't find out until it actually ended up in court.

Unfortunately, that is true no matter who does the work. You also have to make sure your spouse (if you have one) is onboard and understands what you are doing and why. Your lawyer will always tell you there is some risk of loosing if/when you go to court. If you believe the risk is low and your significant other thinks high, you have a problem. You can build a fort, but when a hostile army arrives you have to decide how much you believe in it. Not easy decisions.

You might consider coming at it from the other side. There are standard estate planning procedures, such as Living Trusts, which are good to have in place (You do NOT want your heirs to have to go through probate), inexpensive to set up and well understood by the legal community. If you have no assets, you can still be sued, but make a much less inviting target.

[Chris]

Paul I thought about that also.... but I am worried about someone downloading my software installing it on their server and my software being blamed for data loss of something of that nature. It is highly unlikely but that still concerns me with my house and everything else being at risk.
Sounds like you want errors & ommissions insurance. You can get insurance against bugs in your software causing problems, call an insurance agent who insures businesses... and remember that insurance premium is tax deductible.

[asphalt]

There are alot of great tips and ideas thanks. I have seen an LLC work a couple of times for other people when a company comes to sue. Just the other day a machinist around here was sued and although it was his fault there really wasn't much the person who did the suing could get becaused he sued the owner himself instead of the corp. (this is what the person who sued him said)

Another big concern is of course the cost, I have a lot of other cost I will be paying out just to get the software out the door and ver1 will probably only sale a handful. So I know at this point I cannot come up with "extra" money for a lawyer, I am guessing it would be 3500 or so atleast but I have not called yet.

Chris, I never thought about that type of insurance that will be something I will look into.

Paul, the living trust idea where could I look for more info?

Does anyone have any reading suggestions on these topics, I am planning on reading "inc and grow rich" and Nolo has a legal book for websites and software developers that looked good.

http://www.nolo.com/product.cfm/ObjectID/2C02C865-21E7-497C-9DDDBA058175FFA1/310/

[demosfen]

One other option to consider for asset protection is to form a trust and put your valuable property in it. It's only worth it if your assets are worth a lot, like 500k or more. Will cost money, but after that sole proprietorship may do the job for you, since loss of property because of suits won't be an issue.
In fact, if your property is worth a lot , it's a good idea in any case

[Chris]

Nah, not $3500. More like between $300 and $1000 to get a corp setup and lawyer consult on running it smartly.

[paul]

www.nolopress.com for living trust software and informaton.

[asphalt]

Ok, thanks everyone I have alot to think about. I will call a lawyer in the coming weeks and speak with them and see what they recommend also.

thanks again

[demosfen]

They usually recommend whatever brings highest fees for them. Still have to do your homework even if you consult a lawyer. :nod:
I've been looking into living trusts myself and have some documentation about different types and advantages of each. I can send it to you if you PM me your email address. Am considering irrevokable living trust because it seems to offer most protection