Starting an LLC: Where to begin?

Nathan Cox25 said:Thanks. So you're saying my Social Security number isn't actually required?

Not at all... You won't find it on the signage or the official seal....

Thanks. We’re putting together a wooden sign for a client, but they didn't really have a clear vision of what they wanted. Since we run our own small business—and honestly, we should've just gone with a custom wood sign ourselves instead of settling for that cheap plastic stamp look—we ended up just sticking to the bare essentials. Just the company name, address, and owner info... I wasn't entirely sure what the legal minimum was for a US business sign anyway.

So, I was wondering if someone working a government job—specifically out in the military—is actually allowed to go ahead and start their own LLC, run the whole show as director, and maybe have one employee on the payroll?

If one corporation acquires another, does a tax hit follow? What if they just buy a stake and the original entity remains intact? Or does the target firm simply vanish into thin air upon acquisition?

Not seeing much action here, but I’ll throw my hat in the ring and see if anyone actually bites... 🙂
So, the company was officially incorporated back in 2009, but they didn't actually start doing anything until 2011. According to the IRS, since they weren't operational during that gap, no financial statements were filed. Now I'm stuck wondering—since the account balance dropped due to bank fees before Jan 1st, 2011, how does the opening balance sheet look? What do we even list for the starting balance and the initial capital? And when you finally kick off operations after being an empty shell for years, how do you book all that? Oh, and what about that loan the owner put in to cover their stake, especially since part of it was paid back last year...

Alex Watson21 said:Not seeing much action here, but I’ll throw my hat in the ring and see if anyone actually bites... 🙂
So, the company was officially incorporated back in 2009, but they didn't actually start doing anything until 2011. According to the IRS, since they weren't operational during that gap, no financial statements were filed. Now I'm stuck wondering—since the account balance dropped due to bank fees before Jan 1st, 2011, how does the opening balance sheet look? What do we even list for the starting balance and the initial capital? And when you finally kick off operations after being an empty shell for years, how do you book all that? Oh, and what about that loan the owner put in to cover their stake, especially since part of it was paid back last year...

Let me try to weigh in; look, if the company was formed in 2009, an opening balance sheet should have been drafted then. If there were *any* transactions in the business account, you should have been filing reports and preparing annual balance sheets every single year.
If you're calling the money used for the initial capital contribution a "loan," then you've got it wrong—that's just paid-in capital. On the flip side, if the company paid out money to the owner, then the company gave him a loan.

Betty King7 said:If one corporation acquires another, does a tax hit follow? What if they just buy a stake and the original entity remains intact? Or does the target firm simply vanish into thin air upon acquisition?

If you’re just buying a stake in a company, there's no tax hit for the acquiring entity. However, once you get into actual mergers, things get messy—there are tons of different combinations and potential liabilities. You might be looking at real estate transfer taxes in certain scenarios, or even specific excise taxes on vehicle fleets depending on how the deal is structured...

Raymond Martinez10 said:Let me try to weigh in; look, if the company was formed in 2009, an opening balance sheet should have been drafted then. If there were *any* transactions in the business account, you should have been filing reports and preparing annual balance sheets every single year.
If you're calling the money used for the initial capital contribution a "loan," then you've got it wrong—that's just paid-in capital. On the flip side, if the company paid out money to the owner, then the company gave him a loan.

Thanks for the input! 😉
Regarding the tax stuff, I thought that was how it worked too, but the IRS folks told me the exact opposite, so I just went with what they said...
So, you're saying an owner can't basically loan the money for the initial investment and then pay himself back interest-free down the road? 😕🤷 I read somewhere else that it was totally fine and completely legal...🤷☕

Who exactly did he lend money to???
The founder injects the initial capital directly into the company.
Founders can only reimburse themselves for formation costs—think notary fees, filing fees, etc.—if the operating agreement specifically allows for it. But even then, they have to wait until the company actually starts operations and kicks off its business activities (per standard US corporate law).
And he can just pay himself back for that loan—it’s not like he actually lent the company anything.
As far as the balance sheet goes, you still had to file if there were any business transactions on the account, like those reimbursements you mentioned.

Raymond Martinez10 said:Who exactly did he lend money to???
The founder injects the initial capital directly into the company.
Founders can only reimburse themselves for formation costs—think notary fees, filing fees, etc.—if the operating agreement specifically allows for it. But even then, they have to wait until the company actually starts operations and kicks off its business activities (per standard US corporate law).
And he can just pay himself back for that loan—it’s not like he actually lent the company anything.
As far as the balance sheet goes, you still had to file if there were any business transactions on the account, like those reimbursements you mentioned.

Thanks!!!
But when and under what rules does that happen? Like, what’s required for the company to pay out a loan to a member who's also the director? Is there a deadline for paying it back, or is it even mandatory at this stage?
The company doesn't have any employees yet, if that even matters in this mess...

If you set up an LLC and aren't working anywhere else, the founder basically has to be on the payroll just to satisfy the IRS, paying minimum taxes starting from $997.

What I’m really wondering is if there are two or more founders (partners, co-owners), do they all have to be officially employed and paying those minimum $997 to the government?
I'm asking because for a startup with 3 or 4 founders, dropping $9,000 - $4.00 right out of the gate feels like a massive hit before the business even gets off the ground.

If this is unavoidable, what are the workarounds? And how can other members join the ownership later on (besides that one required person)? Is there actual legal paperwork for this, or is it mostly just handshake deals?

Thanks...

Forgot to mention that ALL the founders are unemployed...

analogwalker32 said:If you set up an LLC and aren't working anywhere else, the founder basically has to be on the payroll just to satisfy the IRS, paying minimum taxes starting from $997.

What I’m really wondering is if there are two or more founders (partners, co-owners), do they all have to be officially employed and paying those minimum $997 to the government?
I'm asking because for a startup with 3 or 4 founders, dropping $9,000 - $4.00 right out of the gate feels like a massive hit before the business even gets off the ground.

If this is unavoidable, what are the workarounds? And how can other members join the ownership later on (besides that one required person)? Is there actual legal paperwork for this, or is it mostly just handshake deals?

Thanks...

No, a founder doesn't need to be employed anywhere—they could be a student, a retiree, or even a foreign national living outside the US.

What you described actually applies to the manager. If there are multiple managers, I assume each one would need a valid reason to be paying into the system...

analogwalker32 said:If you set up an LLC and aren't working anywhere else, the founder basically has to be on the payroll just to satisfy the IRS, paying minimum taxes starting from $997.

What I’m really wondering is if there are two or more founders (partners, co-owners), do they all have to be officially employed and paying those minimum $997 to the government?
I'm asking because for a startup with 3 or 4 founders, dropping $9,000 - $4.00 right out of the gate feels like a massive hit before the business even gets off the ground.

If this is unavoidable, what are the workarounds? And how can other members join the ownership later on (besides that one required person)? Is there actual legal paperwork for this, or is it mostly just handshake deals?

Thanks...

I get that a CEO has to pay payroll taxes and all that, but I’m curious about the logistics if there are four directors on the board. Do they all actually have to be on the official payroll? Is there a way to structure it so one person holds all the decision-making power without being an "employee" in the eyes of the IRS—maybe something like a proxy or a consultant role? It feels like a massive waste of money to be paying full benefits and taxes for four different executives before the business even finds its footing. If anyone knows how this works, let me know.

Maria Kern2 said:I get that a CEO has to pay payroll taxes and all that, but I’m curious about the logistics if there are four directors on the board. Do they all actually have to be on the official payroll? Is there a way to structure it so one person holds all the decision-making power without being an "employee" in the eyes of the IRS—maybe something like a proxy or a consultant role? It feels like a massive waste of money to be paying full benefits and taxes for four different executives before the business even finds its footing. If anyone knows how this works, let me know.

I don't quite follow why a company would feel the need to appoint four separate directors. Is that really necessary? If a director isn't actually performing any duties, why bother with the title at all? Wouldn't just listing them as a founder or shareholder suffice...

Thomas Ortiz3 said:I don't quite follow why a company would feel the need to appoint four separate directors. Is that really necessary? If a director isn't actually performing any duties, why bother with the title at all? Wouldn't just listing them as a founder or shareholder suffice...

Yeah, I'm lost on that one too. 🙂

Anyway, in the specific situation I was talking about, there's zero need (or intention) for everyone to be an executive. I was just wondering how the equity contributions work.

One more thing—where can I find this kind of info outside of this forum? I checked out some sites like Investopedia, but everything there assumes there's just one single founder who also happens to be the CEO...

And what’s the deal with students? Can they be listed as founders while still keeping their student status/benefits, or does that mess things up?

analogwalker32 said:Yeah, I'm lost on that one too. 🙂

Anyway, in the specific situation I was talking about, there's zero need (or intention) for everyone to be an executive. I was just wondering how the equity contributions work.

One more thing—where can I find this kind of info outside of this forum? I checked out some sites like Investopedia, but everything there assumes there's just one single founder who also happens to be the CEO...

And what’s the deal with students? Can they be listed as founders while still keeping their student status/benefits, or does that mess things up?

I'm not sure you grasp the distinction between a founder and an executive.
An executive is the responsible party, and they have to pay taxes based on certain regulations. My understanding is that if there are multiple executives, taxes must be paid for each one—though not necessarily by the firm they manage.

A founder is effectively the owner of the enterprise, much like a shareholder. Just as an AT&T shareholder could be a student, a retiree, or anyone else regardless of whether they pay active payroll taxes, ownership of a company has nothing to do with being a student.

At the very least, one person has to serve as the executive, and those individuals are subject to tax obligations. As for the founders, there is no such requirement or liability...

Thomas Ortiz3 said:I don't quite follow why a company would feel the need to appoint four separate directors. Is that really necessary? If a director isn't actually performing any duties, why bother with the title at all? Wouldn't just listing them as a founder or shareholder suffice...

Let's say four friends want to start a business. They all want the power to sign deals, pull loans from Chase, authorize payments, stomp seals on paperwork, etc.—and they all want to share the blame when things inevitably go sideways. Personally, I wouldn't want to be the director if I had three other people slacking off around the office just because they own 25% of the place, just like me, while I’m the only one left holding the bag. That's my take.

Maria Kern2 said:Let's say four friends want to start a business. They all want the power to sign deals, pull loans from Chase, authorize payments, stomp seals on paperwork, etc.—and they all want to share the blame when things inevitably go sideways. Personally, I wouldn't want to be the director if I had three other people slacking off around the office just because they own 25% of the place, just like me, while I’m the only one left holding the bag. That's my take.

I doubt you can pull off everything you listed without everyone paying into the payroll taxes. You can handle withdrawals with a power of attorney, and even closing a deal over coffee isn't that complicated, but having signature authority and shared liability... that usually requires official tax filings and payroll compliance.

Maria Kern2 said:I get that a CEO has to pay payroll taxes and all that, but I’m curious about the logistics if there are four directors on the board. Do they all actually have to be on the official payroll? Is there a way to structure it so one person holds all the decision-making power without being an "employee" in the eyes of the IRS—maybe something like a proxy or a consultant role? It feels like a massive waste of money to be paying full benefits and taxes for four different executives before the business even finds its footing. If anyone knows how this works, let me know.

If there are four directors, all four have to pay into the system—it doesn't matter who the founders are, as file mentioned.
The smartest move is to set it up right away as one Board Member/CEO and three authorized proxies; that needs to be baked into the Articles of Incorporation from day one.
That's where you can define specific roles—keep in mind, though, that the Board Member/CEO is the one ultimately on the hook.