Starting a Small Business/Setting up LLC

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Expert: Jonas M. Grant, Esq. - 5/18/2004


Question
I live in Kentucky and they only require Aricles Of Organization to register the company in Kentucky I have the form and can handle that.

I need help with what is required by the feds. The name of the company will be David R Elliott LLC income will come from various sources in the form of commissions all covered by 1099's to me. I plan to set the company up with two members me and my wife. If can, I want to show her as 70% and me as 30% for pass through of income. Your comments please.

David

Answer
Only the Articles must be filed; however, there should be a custom Operating Agreement and Organizational Minutes, as well.  Also, it seems you have already weighed the pros and cons of an LLC vs S corp and settled on an LLC, a decision which I always recommend be made in conjuction with an attorney and/or CPA.

To clarify, the 1099s should be to the LLC, not to you personally.  

LLCs are quite flexible in terms of splitting profits and losses unevenly among members -- this is generally accomplished in the Operating Agreement provisions.  However, it appears what you really have is a tax question -- will the IRS allow this?  For the answer, you need to consult an accountant for advice.  It is I suspect going to be relevant whether she has or does contribute(d) money, property, or services to the LLC.

Best of luck with the new venture.  

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Jonas M. Grant, Esq.

Expertise

Licensed California attorney with a solo practice focusing on self-employed individuals and small business clients. I can help with contract and business entity (S and C corp, LLCs) questions, as well as copyright and trademark questions.

Experience

I am an attorney licensed in California and Illinois, with a law practice devoted to serving entrepreneurs, small businesses, creative professionals, and the Internet and entertainment industries.

Bar Admissions
California - Active Member in Good Standing; No Record of Discipline
Illinois - Active Member in Good Standing; No Record of Discipline

Education
JD/MBA, Indiana University School of Law / Kelley Graduate School of Business, Bloomington, Indiana;
BA, Northwestern University, Evanston, Illinois.

Partial List of Legal Services Offered
S corporation counseling and formation nationwide
C corporation counseling and formation nationwide
LLC (Limited Liability Company) counseling and formation nationwide
LLP (Limited Liability Partnership) counseling and formation nationwide
Corporation, LLC, and LLP dissolution and winding up nationwide
State & federal trademark and service mark filings and advice
Internet domain name disputes
Copyright filings and advice
Custom-drafted contracts and reusable templates
NDA (Non-Disclosure Agreements) and other employment agreements
Contract/deal negotiation and dispute resolution
Website privacy policies, user agreements, legal notices
Entertainment law services

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