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Roger
Roger, Attorney
Category: Business Law
Satisfied Customers: 31731
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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Can someone please advise me on the best type of business to

Customer Question

Can someone please advise me on the best type of business to set up for my new company? I don't want to be personally liable for anything related to the business. I've heard LLC's require personal guarantees for credit cards, leases etc. Thanks
Submitted: 4 years ago.
Category: Business Law
Expert:  Roger replied 4 years ago.
Hi - my name is Kirk and I'm a Business litigation attorney.

An LLC is the best protector of personal liability for the actions of the company. The only liability for an individual owner is basically if a criminal act is performed. HOWEVER, it is possible for any creditor to require a personal guaranty from the individual member/s of the company before extending credit. BUt this can happen regardless of what legal entity you form - LLC, Inc., S-Corp, etc.

Personal guarantees is how creditors avoid the possibility of not being paid a debt because the company goes out of business with no assets. The creditor has the right to demand this, and you can't prevent it no matter what type of corporate entity you establish.

However, personal guarantees are not REQUIRED - - instead, this is up to the lender/creditor.
Customer: replied 4 years ago.

do you know if I can open a business checking account in another state? outside of where my company is legally set up?

Expert:  Roger replied 4 years ago.
Yes, there's nothing wrong with that - - legally. It can be done.
Customer: replied 4 years ago.

Thank you. Is there any way I can open a business bank account without my name on it? Or can I list only as a "signer"?

Expert:  Roger replied 4 years ago.
A business bank account can be in the name of the company only - - without your name listed on the account as an owner. However, you will have to be listed as an authorized signer.
Customer: replied 4 years ago.

Kirk, I have more questions for you regarding the LLC. I went to set up a new LLC through Legal Zoom.


1. Do you know if Legal Zoom is legitimate?


2. One question is "who should be listed as a contact for the IRS to contact if they have questions on my LLC application or EIN #. I want to remain anonymous from the LLC so how can I provide this?


3. How should I manage taxes and employees as a pass through entity or corporation?


4. Who will the representative be that is registered with the state for PA sls tax? Again how can I avoid this as an anonymous owner?


5. Legal Zoom provides something called Registered agent. They said


this protects my anonymity. Is this true?


 


 

Expert:  Roger replied 4 years ago.
1. Do you know if Legal Zoom is legitimate?

I have never personally used it, but I think it is legitimate.

2. One question is "who should be listed as a contact for the IRS to contact if they have questions on my LLC application or EIN #. I want to remain anonymous from the LLC so how can I provide this?

If you don't want to put your name, you would have to list another member or your accountant/bookkeeper.

3. How should I manage taxes and employees as a pass through entity or corporation?

LLC's provide for pass through taxation, which will allow the member/s to pay taxes on the business profits on their personal returns. This is usually better than to have the taxes paid through the corporation - - if you were to set up a corporation (inc.).

4. Who will the representative be that is registered with the state for PA sls tax? Again how can I avoid this as an anonymous owner?

If you don't want to use yourself, it would have to be another member or an authorized agent that you hire - - like a lawyer or cpa.

5. Legal Zoom provides something called Registered agent. They said this protects my anonymity. Is this true?

Sort of. A registered agent is required by law, and this is the person who can be served with legal process/summons in the event that the LLC is sued. This can be an attorney, a member of the company, a corporation, etc.

Customer: replied 4 years ago.

Legal Zoom said they can be listed as the registered agent. Should I feel comfortable with this?


 


Also, paperwork is sent to a specific address on file. If I list my personal address for the LLC and the business gets sued down the line is my house in danger of liens etc.

Expert:  Roger replied 4 years ago.
That means if you are sued, Legalzoom will be served with the papers and they will then have to relay them to you. This is not uncommon and several corporations exist simply to serve as a registered agent for a corporation. Thus, this is not something that is uncommon. Whether you're comfortable with it is up to you.

No, your house would not be in danger because the PO Box address is used.
Customer: replied 4 years ago.


But I'm not using a po box rather my home physical mailing address.

Expert:  Roger replied 4 years ago.
It doesn't matter. Using your personal address doesn't invalidate the protections you have by forming the LLC. That's nothing to worry about.

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