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What's the "Best" way to set up my LLC business with this…

What's the "Best" way to...
What's the "Best" way to set up my LLC business with this scenario and pay myself along with one other employee/partner?
-- Currently a sole proprietor with two businesses in very closely related fields. Using 1 fed EIN, no state registration or dba.
-- Company A is a communications company that deals with many different aspects of communication relations.
-- Company B is a hobby/craft type of business that sometimes does business Company A to make things look pretty for Company A's clients.
-- Company B is paying monthly invoices for assistance and will file it as 1099 contractor in next years taxes
-- I have been mixing Company A, Company B and personal expenses -- same banks accountsWould like to make an LLC, setup two separate bank accounts for Company A and Company B. 1099 Contractor will now be paid a percentage of Company A revenue. I will pay myself a percentage of Company A revenue. Will pay myself a percentage of Company B revenue. I am the sole owner of both companies however may consider adding the current 1099 contractor as a partner. Need the best way to setup this business without making it too complicated for a single person owner. Which forms do i need?
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Answered in 12 hours by:
11/17/2017
Richard - Bizlaw
Category: Business Law
Satisfied Customers: 10,841
Experience: 30 years of corporate, litigation and international law
Verified

Hello, my name is ***** ***** I will try to help you. Please remember I just report or interpret the law, so the outcome may not be what you hoped for.

If the 1099 contractor would become a partner in both businesses, then you would do a single LLC. If he is going to be a partner only in one business, then you need two LLC's. If you will only need one LLC, then you would form the LLC in Maryland. You can pay a service to form the LLC or do it yourself. Here is a link to the government site that will provide you with the information you need. https://egov.maryland.gov/businessexpress#/

Once your LLC is formed, then you want to create a dba for the second business under the LLC. You can get the information on how to obtain a dba on the same site. The LLC can then open two bank accounts one in its own name and one in the name of the dba. You can then keep the finances of the two businesses separate. However, when it is time to file your taxes, the two businesses are combined and you file them on Schedule C of your personal tax return.

If you form two LLCs, the business with the partner has to file its taxes on form 1065. The business that you wholly own still gets filed on Schedule C of your personal tax return.

If I have answered all your questions, please highly rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.

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Customer reply replied 8 months ago
Thank you. So if I pick the scenario of 1 LLC(Company A) and a DBA for Company B, how to pay someone a percentage of company A, would that still be a 1099 situation? I am The sole owner, no legal partnership, just an agreement to get X percent of the sale from each client.

Your agreement with the person would specify the particular company on which his percentage of the sales would be based. If the person got 20% of revenue for all customers he brought in for Company A, that payment would be 1099 income to the person assuming he operates as an independent contractor. That would mean he controlled his own time and worked on getting customers as he saw fit. The person would not own any part of the business. it would be like having an independent sales representative.

If I have answered all your questions, please highly rate my answer as that is how I receive credit. If you have more questions, please let me know. If the answer was especially helpful you can provide a bonus.

Richard - Bizlaw
Category: Business Law
Satisfied Customers: 10,841
Experience: 30 years of corporate, litigation and international law
Verified
Richard - Bizlaw and 87 other Business Law Specialists are ready to help you
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Customer reply replied 8 months ago
Last thought/question. I have a tendency to create business opportunities -- kinda like a super entrepreneur. Would it be best to set the LLC up as MY NAME, LLC to encompass all dba ventures I come up with later?

Yes that is a good approach. Thank you for accepting my answer. If I can be of help in the future please ask for me, Richard-Bizlaw

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