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Written by : Drew Monterrubio
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Thanks for your comment Bart Kriener, have a nice day.
- Drew Monterrubio, Staff Member
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 Demetrius your participation is very much appreciated
- Drew Monterrubio
About the author
I've studied kinship at Brewton-Parker College in Mount Vernon and I am an expert in popular culture studies. I usually feel mad. My previous job was preschool teacher I held this position for 10 years, I love talking about fusilately (phonecard collecting) and astronomy. Huge fan of Paul McCartney I practice billiards and collect military items.
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