can you start an llc without a business [New Research]

Last updated : Sept 24, 2022
Written by : Lonnie Sleek
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can you start an llc without a business

What happens if an LLC doesn't make money?

If an LLC elects to be treated as a partnership for tax purposes, and the business did not generate any income during the taxable year, it is generally not necessary to file a tax return, unless there are business expenses to be treated as credits or deductions.

What is the downside of an LLC?

Disadvantages of creating an LLC Cost: An LLC usually costs more to form and maintain than a sole proprietorship or general partnership. States charge an initial formation fee. Many states also impose ongoing fees, such as annual report and/or franchise tax fees. Check with your Secretary of State's office.

Can you make money without an LLC?

However, if you are wondering "do I have to have an LLC to start a business?" the answer is no. Though an LLC is a very popular business structure, you may choose a different structure for your business, such as a sole proprietorship, a simple partnership or a corporation.

Does an LLC need a business license in Virginia?

Though Virginia does not require all businesses to obtain a business license, many cities and counties require all businesses to have a general business license. LLCs are a type of legal entity and will still be required to obtain any appropriate business licensing depending on the type of work conducted.

Should I start an LLC before making money?

Is an LLC Necessary To Start a Business? You don't need to start an LLC when establishing your business. However, if you want to differentiate between your assets and the company, an LLC is the right way to go. You should start an LLC if you want to start a business and protect your personal assets.

Does an LLC need a business license in California?

LLCs, Corporations, LPs, LLPs, or GPs operating in California need to register and form their legal entity with the California Secretary of State's Office, file appropriate taxes, register as an employer, and obtain business licenses and other permits from appropriate cities or counties.

Can I form an LLC and not use it?

A newly formed LLC might not have started doing business yet, and an older LLC might have become inactive without being formally dissolved. But even though an inactive LLC has no income or expenses for a year, it might still be required to file a federal income tax return.

How do you make money with an LLC?

As a member of the LLC, you can receive profits from the company throughout the year or at the end of the year. When you set up the LLC, you and the other members create what is called a capital account. The amount you invest in the company goes into the capital account, as do any profits that belong to you.

What should I put for purpose of LLC?

Statement of Purpose. Most states do not require you to be specific about the purpose of your LLC. Instead, a statement such as "The purpose of the Limited Liability Company is to engage in any lawful activity for which a Limited Liability Company may be organized in this state" is usually sufficient.

How is LLC taxed?

Working of LLC Taxes For the purposes of federal income tax, LLCs are treated as pass-through entities, which means that LLCs themselves do not pay taxes on their business income. It is rather its members who pay the taxes on their share of LLC's profits.

Why is LLC may not beneficial?

Profits subject to social security and medicare taxes. In some circumstances, owners of an LLC may end up paying more taxes than owners of a corporation. Salaries and profits of an LLC are subject to self-employment taxes, currently equal to a combined 15.3%.

Is it better to be self employed or LLC?

You can't avoid self-employment taxes entirely, but forming a corporation or an LLC could save you thousands of dollars every year. If you form an LLC, people can only sue you for its assets, while your personal assets stay protected. You can have your LLC taxed as an S Corporation to avoid self-employment taxes.

How much money do you have to make to be considered a business?

Unincorporated Businesses As a sole proprietor or independent contractor, anything you earn about and beyond $400 is considered taxable small business income, according to Fresh Books.

Is a side hustle considered a business?

As soon as you start earning money in your side hustle, you're a business and considered a “sole proprietor.” Simply, any individual who provides a service and collects money from it is a sole proprietor. Many businesses start this way and many don't need to be anything else.

How much is it for a LLC in VA?

How much does it cost to form an LLC in Virginia? The Virginia State Corporations Commission charges $100 to file the Certificate of Formation. You can reserve your LLC name with the Virginia State Corporations Commission for $10.

How long does it take to start an LLC in Virginia?

You can get an LLC in Virginia in 2-3 business days if you file online (or 2 weeks if you file by mail). If you need your Virginia LLC faster, you can pay for expedited processing.

Do you need a license to start a business at home?

Any business, including home-based businesses, must obtain a local city or county business license. This is a basic license that allows the holder to engage in business activities within the local jurisdiction.

At what point does a LLC make sense?

When a business owner has personal liability protection, they can't be held personally responsible if the business suffers a loss. This means personal assets (car, house, and bank account) are protected. If your business already earns a profit or if it carries any risk of liability, you should start an LLC immediately.

Is income from an LLC considered earned income?

LLC (taxed as a C corporation) or a shareholder in a C corporation: The profits of the business aren't considered earned income, but rather are considered a return on investment and are taxed at special corporate income tax rates.

Why having an LLC is good?

The main advantage to an LLC is in the name: limited liability protection. Owners' personal assets can be protected from business debts and lawsuits against the business when an owner uses an LLC to do business. An LLC can have one owner (known as a “member”) or many members.

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can you start an llc without a business

Comment by Carlee Voth

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Thanks for your comment Carlee Voth, have a nice day.
- Lonnie Sleek, Staff Member

Comment by PortmannN

that was so family it's your favorite uncle cousin Tyrone Gregory back at it again here with another video and this time I am going to be doing my very best to convince you of the fact that you do not need an LLC to start your business or any other kind of business structure for that matter this is something that I feel is truly important something that I think every aspiring entrepreneur anybody who's looking to start a business should know this is something that I wish somebody would have told me when I was very when I was just getting started out so let's go ahead and get to today's video why you don't need an LLC there are plenty reasons to form an LLC however those reasons are extremely specific and strategic you don't form an LLC just because the your your friend told you so or you heard an advertisement on a radio you went to a seminar even if you watch the video and somebody said that if you're starting a business you did LLC that is the incomplete incorrect wrong way and wrong reason for wanting to start an LLC trust me as somebody who has been preparing taxes for small businesses over a decade now I can honestly say with certainty that over 80 percent of the people who have LLC's don't need one and what's even worse is the reasoning behind why people want LLC's I've heard some ridiculous reasons why people want LLC's as a matter of fact the inspiration for this video happened because doing past tax season a gentleman came and sat down at my desk and argued with me for 15 to 20 minutes as to why he wanted an LLC and I did my best to convince him that he didn't as a matter of fact the conversation with a little something like this hey boss smells go out or not gonna help you what's up bro I need to form an LLC okay this is there a particular reason why you want to form an LLC yeah cuz I'm about to start driving for uber okay that's it you're just gonna drive for uber you're not gonna do anything else you're not about to buy a fleet do something up there maybe invest in something start other businesses I mean is that really the only reason you wanna start an LLC just because you're talking for a little bit yeah man is what they told me I can save a lot of money your father incorporated us started LLC well if that's the only reason you wanna start a LLC man let me honestly tell you know you don't yes I do no you don't man yes I do no you don't and that conversation lasted longer than they need it to for yeah and that's exactly how that conversation went so let's go ahead with our in further delays let me do my best again to try to explain to you why you do not need an LLC starting with this question here I am going to do my best to break down what exactly is an LLC so let's go ahead and start with the basic understanding of what it is and LLC is a state-level entity meaning that it is formed and recognized only at the state not at the federal level as a matter of fact when it comes to the government initially the federal government treats you like you know you're a piece of lint on their shirt I just kind of flick your weight everybody don't pay attention to you there you know get out of here we don't recognize you don't know what you are and if you want to be recognized by the federal government the IRS you are going to have to fill out some additional paperwork the only exception to that meaning that you won't be required to fill out additional paperwork in order to be recognized is if you and another individual they are the ones who are forming this this LLC together making it a multi-member LLC you will then be automatically recognized as a partnership meaning that the IRS is going to treat you as a partnership you're gonna have them file a partnership tax return meaning that the earnings and income is going to be reported on a 1065 each individual gets a k1 and you go on from there that is the only exception to the rule of being recognized by an IRS you becoming a multi-member LLC outside of that everything else is the same so as you can see just by forming an LLC it's not going to give you corporation status which is the first reason why you don't need an LLC all right so moving on next let's break down the name l.l.c which stands for limited liability company and for purposes of breaking down the night I'm actually going to do it in reverse order going to start with the C and work our way up so looking at the letter C we can see that C stand how about there we can see that C that's C stands for company not corporation okay we can see that's a very distinctive difference LLC is a limited liability company not a corporation however this just reiterates what I said in the beginning LLC's are state-level entities not initially recognized by the federal government okay does that really make a difference on anything no not really I just started with something you know something for for you to know what here okay so anyway moving on next one the two ales the limited and the liability I'm grouping these together right now because those two words together limited and liability or would cause people to drool over this particular business structure the words limited in liability to most equal asset protection and truthfully speaking it is if done right but then when it comes to asset protection it leads me to ask the question what exactly is an asset well according to Google and asset is property owned by a person or a company regarded as having value and available to me debts commitments or legacies now let me go ahead and break that down because when it comes to forming LLC's that is the biggest reason why people want to form LLC they always say they want to protect their assets and then it it kind of I don't want to sell meat or anything but I'm like you know we really got to go through it and understand what an asset is do you really have any assets to protect meaning that if you're renting you don't own the building right you're you're renting if you you don't own it it's not your asset if you are still paying your Cardinal or you're leasing the vehicle you don't own that you don't own the vehicle if you think I'm playing don't pay the card no don't pay the lease agreement see what happens remember an asset is something that you own all right free and clear you have the title you're you it's is yours you have the pink slip renting and and still paying Cardinals that is not an asset even if you were in a house and you're paying a mortgage you don't own that home until the mortgage is paid off again if you think I'm playing don't pay their mortgage and see what happens you need to own it free and clear in order for it to be considered your asset so think about that when you're trying to say hey I need asset protection do you really have any assets yes we may own jewelry and things like that but if it's not worth you know thousands of dollars then are you really trying to protect this so if you're thinking of starting an LLC just for purposes of asset protection really doing inventory and see what assets do you have think about can you convert that item that you're thinking about can you convert it immediately into cash to pay a

Thanks PortmannN your participation is very much appreciated
- Lonnie Sleek

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