Incorporating, LLC, etc.? How, Why, Why Not, How Much?

[eltee]

How many of you dealers incorporate, form LLC's, etc.? What about small timers / single man operations? Benefits, problems, out of state corporations, etc.? Services used, do it yourself, etc.?

[FortCourageArmory]

I'm a corporation. -S- corp to be specific. Benefits are all the profits (yeah...all the profits!!) can be passed dirtectly from the corporation to the owners without being subject to corporate taxes. Only have to pay personal income taxes on the $$. Saves being taxed twice on the same $$. Also, in the event of a devistating lawsuit, the corporate barrier will provide somewhat of a shield for personal assets.

[halifax]

I'm a corporation. -S- corp to be specific. Benefits are all the profits (yeah...all the profits!!) can be passed dirtectly from the corporation to the owners without being subject to corporate taxes. Only have to pay personal income taxes on the $$. Saves being taxed twice on the same $$. Also, in the event of a devistating lawsuit, the corporate barrier will provide somewhat of a shield for personal assets.

OK, those are the benefits. What are the costs?

[fuegoslow]

Go to legalzoom.com. Everything you could ever need from a lawyer or Legal firm at a fraction of the cost.

[eltee]

Maybe one of the many CGN legal eagles can take some time from the 2A forum and pop over here and offer some insight as well. It would be interesting to see if there were any savings in insurance costs for kitchen table dealers, or what actual level of shielding might be realized from from lawsuits. Specific FFL insurance seems extremely costly, even for those who just do transfers and keep no inventory.

[SDProtection]

How many of you dealers incorporate, form LLC's, etc.? What about small timers / single man operations? Benefits, problems, out of state corporations, etc.? Services used, do it yourself, etc.?

check out www.lawinc.com I used them and they are cheaper than Legal zoom. They are CA only as well, so they know what they are doing in this chaotic state.

There are too many reasons to go into as to why you should incorporate. However, you need to look at LLC or corporation. LLC may be easier or an S-Corp. Having had my fair share of companies, I can tell you that the liability alone should have you running to the nearest post office to send in your paperwork. Here is one good reason why you should: With a corporation (or LLC) you personally can't be liable so they can't come take your home if you screw up (or someone else screws up but wants to blame you). The liable entity is the corporation, not the employee (which you are regardless of being an owner). The corporation can only be liable up to the amount the corporation has in assets, so there is your limit. Of course you have insurance for these issues, but at least you have a huge bullet catch between your personal assets and your corporations efforts.

just my opinion. Do your homework.

JP

[tenpercentfirearms]

Downside, no more "For Owner's Personal Collection" for long guns. I really liked not DROSing long guns and taking them home with me.

[halifax]

Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?

[SDProtection]

Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?

It certainly isn't protection money as the state is out to get all of us with an FFL sooner or later. So, let's stick with "tax". The first year fee is waived for an S-Corp.

[rkt88edmo]

Help me understand. Why the recurring fee $800/yr? Seems you are just filing a legal document once. Who does the $800/yr go to? Is this a tax, protection money?

In a nutshell, it is basically the current minimum fee the state of CA charges to do business.

[halifax]

OK, thanks guys. If I were to go with business insurance instead for $800/yr and my home/net worth isn't greater than the $1M policy coverage, I should be OK. I think

[rkt88edmo]

Yes, at that point you may be better off as a sole proprietor, but remember, even if you don't have that much in personal assets the legal protection may give you peace of mind and keep you from incurring recourse debts beyond your assets.

[ojisan]

The CA $800 per year is just free money for the state.

The LLC was my choice for a small business...yes, the money is only taxed once as part of your usual income like you would get from a regular job.
The LLC also provides some protection from huge judgements in a lawsuit...the LLC name itself tells an attorney right up front that there are no big bucks to be had.
Regardless of the LLC protection, you should always have appropriate liability insurance too, especailly if you manufacture or sell goods.

While I have used Legal Zoom in the past, I did pay an attorney to do all the set-up for my LLC. It was $1,600, but it has to be done right so you don't end up with problems later.

[eltee]

Who is writing FFL policies (insurance) for $800.00 / yr. That seems pretty reasonable, esp. since it is a writeoff.

[halifax]

Who is writing FFL policies (insurance) for $800.00 / yr. That seems pretty reasonable, esp. since it is a writeoff.

Sorry for not answering sooner. I've been stuck in San Francisco for two days wrestling with bureaucrats.

The $800/yr quote was for a kitchen table dealer with no inventory.

http://www.guninsurance.com/