LLC

[Furby]

I am looking for information on setting up a LLC in Michigan.
Can any of you provide me with links and/or info from your own setups?

[Chet]

There are links from the michigan.gov site that will provide you with the forms that you need to file with the state.  Or you could do as I did an talk with an accountant.  They will set you up with the forms and even help you to fill them out if you would like.  I would recomend just filling out and sending in the forms yourself "articles of organizations" they are called.  By filling out the forms yourself you will not have to pay the accountant, only the $50 filing fee with the state.  Hope this helps...

Jeff Swenski
Swenski Construction, LLC

[oakiemac]

Hi Furby.

When I set up my LLC, I had an attorney do it. But if I were to do it again I'd set it up myself. Having said this, I will also say that I am the sole owner and operator. If you are going into buisness with a partner then you probably want an attorney to set things up and make it all legal.

[Norm]

Furby I'll have Patty add to this as she did some research about settin up an LLC for our farm. Go to your secretary of states' web site for Michigan and they most likely have the forms and some intructions on how to set one up. If your setting one up for a business with other people involved then have a lawyer with a business background help. They have experience setting em up so you have some protection. A better question is if you really need one. Sometimes settin up incorporation papers and such is more hassle than it's worth. A common misconception is that it will shield your personal self from the corp, not true.

[redpowerd]

im confused as to how an LLC operates, instead of a partnership, theres shareholders?

how can one be independant and still have an LLC tagged onto their farm?

what happens when shareholders leave?
they just sell out, or a new LLC set up?

this is important around here, as farmers are getting more competitive for acres. anyway to have an edge without loosing your shirt.

[Ga_Boy]

Tom/Jeff,

I hope one of you are watching this.

What about a forum for Management & Business questions.  I know for folks like me who are just staring out I have a lot of questions with no specific place to post them.

Just a thought.


Ga Boy

[Brian_Bailey]

Redpower,  

Here is a link to the types of businesses that can operate in NY.
Legally anyways  

http://www.dos.state.ny.us/corp/formbus.html#llc

[redpowerd]

 
thanks for this link, brian, but it answerd NONE of my questions. thats NY for ya. wait, thats the states for ya. wish i could pick up my farm and move it to brazil!

[Tagerts_crossing]

 Regarding the issue of shares that red asked.  Their can be Two or as many as you want. You can hold them all or if you have two, one in your name and one in your wife,father,son or Buss. partners name.  Not sure if this is what you were looking for or not.  We are in Indiana and went with the c corp. and then changed to the s corp. later.

[Brian_Bailey]

Redpower,  

Here's a link to all your answers  .

http://assembly.state.ny.us/leg/?cl=57

[redpowerd]

very funny, brian

questions answerd for me

now, wheres the advantage?

[Brian_Bailey]

Redpower,

Nothing funny about it, thats the law concerning LLC's in NY. Tells ya everything ya need to know.

Advantage ??  That's up to you to decide if an LLC is right for ya  .

[Ga_Boy]

Have ya considered do'in an S Corp?

Not sure the benefits to LLC over S Corps, the LLC are kinda new so all the laws ain't finished working them self out yet.

[Furby]

This is my problem, is it all worth while?
All the info I can find is vague.
I was told by a friend at work that if I'm going to do work for anyone, as income, and not be an employee of that person, I should protect my personal assets with an LLC.
I'd also like to be able to purchase equipment and be able to write part of it off.
I don't want this getting to big and expensive, then it would defeat the purpose, right?
I plan to be sole owner.
So, any ideas?

[Ga_Boy]

From what I know, which ain't much I want to be an S Corp.  Cause this way if I get sued for some reason they can't touch my house.  They can only go after what is owned by the S. Corp.

DanG lawyers!

[redpowerd]

brian, i was only jokin'
im with furby, as worth-whileness, and vagueness
just wondering on first-handedness, and tidbits like ga boy gave, conversation

[Furby]

Ga_Boy,
It's my understanding that is what the LLC does. The S Corp is a little more complexed.

Ok, they're all complexed!  

[Norm]

An LLC will not protect your personal assets house included, nor will a corporate designation. It is a common misconception but I can tell you from experience that if someone sues you and you are the primary owner all of your assets are fair game. Each state has different rules regarding how to set up a business. For what you want to do Furby it sounds like a sole proprietorship would be better with less hassle. But your asking a question that would be better answered by a lawyer that specializes in business.

[ADfields]

LLC = Limited Liability Corporation and that is just what it is for.   You become an LLC so if you lose a lawsuit at your business you wont lose your home.   Now they could muddy up the waters if they "name" you and your LLC when they sew and it was your fault it happened and not your employees fault but this stuff gets WAY complex!!   You become an employee of the LLC not the guy that owns a house and a sawmill/farm.

There are also tax advantages to it and some tax bad points.   But in 5 years or so the Corp can have it's own credit and you have a firewall around you as a person so if your business credit is damaged yours is not, and if your corp is bankrupt you don't need to go with it.
Andy

[Patty]

I have been studying business law for awhile   and each state has their own rules as to what is legal and how to set it up. As far as protection from lawsuits, if the guy suing you has any kind of a lawyer, you are not protected in any way, the corporation, or limited liabilty company will just slow em down a bit, and just a tiny bit at that, since you would be listed as one of the officers or partners. With that said, Norm & I have our business registered with the state of Iowa as an S-Corp. This was done for tax purposes which is another long subject altogether.  
Some protection is offered if you file as an LLP (limited liability partnership), but that protection is not from lawsuits so much as protection for the partners themselves.
Any accountant can give you the proper forms to fill out, and a GOOD accountant can give advice as to what you should do to fill your needs as far as taxes go, but a business lawyer would be able to answer questions about what type of a set up you need for your business, or if you should just set up as a sole proprieter. One way to find a lawyer who knows business law is to call the local junior college, and ask for the lawyer who teaches the classes. Or, if you have the time, take the business law classes yourself, if the instructor is any good at all, you will leave with a wealth of information. Norm and I owned a business several years ago, that required the use of a lawyer quite frequently. I learned then that a few classes myself would save thousands of dollars in attorney fees and give me peace of mind. Something to consider if you are interested in setting up a business.

[Patty]

Andy is correct in that you can become an employee status of the corp and be protected some, but the officers are ultimately responsible, and that is who the lawyers will go after, in addition to the corp itself.
In theory the corp becomes its own entity, with its own credit etc, however the lawyers will go beyond that, if it is a serious lawsuit, and go after the officers in a personal way too. If it is just a minor lawsuit, and the corp can pay it off if necessary, then the officers won't be tapped, but if it's more than the corp can handle, then the lawyes will go after everybody involved.

[oakiemac]

When I set up my LLC I asked the lawyer if it sheilds my personal assets from the companies. He replied yes and showed me the michigan statutes that applied.
I relize that anybody can sue anybody for just about anything and nothing will protect you 100%, but Michigan law has the LLC just for this purpose.

[Brian_Bailey]

redpowerd,  

Ya, I know, I could feel the tugging on my leg   .
Since you asked some very important questions and you're in NY, I thought it best to point you to the law.

I looked into this subject for my business awhile back and was advised to stay a sole proprietor.
I was told the only reason to go into a LLC or S structure is for the tax advantages in doing so.
Structuring your business as a LLC  for the purpose of protecting your personal assets in case your LLC is sue'd won't hold up in court.
I was also advised it would be better to just purchase additional liability insurance (umbrella coverage).

Everyone has a different set of circumstances and should seek professional advice to see what's best for them.

[redpowerd]

i rely soley on this forum for my professional advice

[Ga_Boy]

Does that mean class is over and we can go outside and play with our toys?

[UNCLEBUCK]

where I live in minnesota alot of people have moved in around the lakes areas and ride bicycles past my driveway and I have 2 very nice dogs that get really ticked if anyone stops on the highway to stare at all my junk and mess so I thought what if they actually take a chomp in someones sock , so I had my insurance company add a 1 million dollar umbrella policy for just pennies a day and now I have peace of mind all with 1 quick phone call and a signature . good topic here as I have always wondered of this !

[OneWithWood]

Furby,
Forget the lawyers.  You want someone who knows a bit more than a lawyer.  You should contact a CPA who specializes in small business.  He/she can properly advise you as to what form of business will suit your needs and be the best for liability and tax issues.  A good CPA will assist you in the set up and not charge as much as a lawyer.  It is possible to shield your personal assets from lawsuits if the business is set up properly and the funds are kept totally separate from your personal funds.  If you can find a CPA who also has a law degree that would be the best of both worlds but they tend to be very expensive.
It will be worth your time and money to check this out.

[Furby]

WHEW!!!!!

Ok, what AD wrote is how all this was explained to me. What Patty brought up deals with my worries. If I am named as owner and am also an employee, I personaly CAN still be sued for what happens, even with an LLC.
Ok, so I know all states are a little bit different on this, but what is the point of being able to setup something called an LLC if it don't mean what it's called? Maybe they should call it an LPC, Limitedly Protected Corporation?  

It's starting to sound like there is a lot of misconceptions about the LLC's, or at least a lot of miseducation.  :-/

Would someone mind giving me a brief description of an S Corp. as well as a Sole Proprietor?

Quick Poll: How many of you are set up as a corp., company, business, ect. And how many of you are just taking the risks and running without any formation?

OWW, I really don't know yet what it is I want to do as a business, but I don't want to start something and get screwed right off the back. I don't want to spend any more then necessary to figure this out, but your advice does sound good.
I hate lawyers and it sounds like they don't know what they are talking about on this or.......... they just don't care.

UncleBuck, does your policy cover you even if it's your fault?

Patty, Those classes are just standard business law classes from a local college? I'll have to check them out.

[Ga_Boy]

Furby,

I'm located in Maryland.  My understanding is under Maryland law as an individul I am protected by an S Corp.

However this thread has brought a good subject to light for those of us in the start-up phase.  I will check with an account/lawyer; not sure which one yet; on April 9.  I'm off the day job that day for spring break with my 7 year old.

I'll post what I learn.

Good, Bad or Indiffrent we'll get through this.

Patty,

Thanks for the heads up on the law classes.  See ya around campus.



Take care,


Ga Boy  

[J_T]

My understanding LLC is easer on tax structuer than a INC. Some people use LLC and corp interchancable not so.Either one all buisness should be seperat from personal.LLC you don't have to hold board meetings .Was told if a lawer is looking to sue a corp they checked first to see if all rules of corpriton were followed.Meetings reports ect lot of things not required in LLC. Anything buisness must contain at the end LLC or if corp INC Like Joe's Sawmill LLC Or if a corp Joes's Sawmill INC Two interley different things .Type in LLC on internet explorer and you should find enough to relley be confused  

[AtLast]

I agreee with the above. I had a CPA do it and he didnt charge me anything. Did all the paper work and filed it for me.
Last Chance Logs to Lumber LLC

[ADfields]

Head on down to a legal forms store in your part of the woods and get a copy of "how to start a business" for your state.   It will run you around $80 or so but is chocked full of all the info you are looking for.

The pole.
I have had a number of corps in the past but don't have one at this time in my name.   But I soon will.
Andy

[Fla._Deadheader]

When we looked into the logging thingy, we also looked into putting the house and ? into a Trust. That is supposed to be fairly bulletproof, and, at least won't have ya livin in a cardboard box.

 My personal theory is, go so deep into debt, when the Lawyers start climbin all over ya, you will dump all the debt on 'em, and they will know they are dealin with MAJOR frustration

[Patty]

Our local college teaches business law. It is taught by a local lawyer who practices in business law exclusively...setting up corps, llcs, llps, doing their taxes etc. I found it very interesting, but I really get into this law stuff, others may find it boring.
In Iowa, the Secretary of State has a good website that gives short versions of FAQ's and basic definitions of these things you are all talking about. You may want to go there for the one in your state and see if they can answer some questions.
Everybody here has good advice. I brought up the worse case scenario...because that is just the way I think, I can't help it!   In all probability, none of you will get sued, you all run an honest business, but if you do get in trouble, it is best to know the facts up ahead of time. Suprises like this are no  fun. Insurance is good for unforseen accidents, like someone mentioned earlier.  All I am saying, is do your research thoroughly. Don't just ask one guy, ask many. Then read up on your own state's laws, as each one will vary some. In my opinion this business structure set-up time is very important, BUT, nothing that you do, whether you register as an S-corp or an LLc or whatever, is forever. Any of these things can be undone, it just takes more paper work and time and money. If you go one route, and then discover it is not what you want, undo it, and go a different route if you want.

[Brian_Bailey]

Here is a link to an excellent source of small business information.

http://www.score.org/

[UNCLEBUCK]

Furby , yes my policy covers even if its my fault, I did some reading of policy last night because the thread you started is so interesting , my policy is on the farm so I have to make less than a thousand dollars profit on sawmill adventure or else the umbrella policy instantly goes into a grey area that I am unsure of , I can make any amount of money farming and the umbrella covers it , like my dogbite story is covered ,everything is covered even the sawmill but only if I dont go over the 1000$ profit , so I guess I better make sure to ask for cash before sawing next time, if a stranger accidentally gets hurt by the sawmill they can try and sue me up to the million dollar cap of the policy, well thats my 2 cents here but sounds like I better keep reading this thread and learn about this LLC stuff . this is a fantastic thread, oh it costs 90 cents a day for the umbrella policy , I think I am going to have customers sign a form like I am not responsible for accident or injury ,or something like that

[ADfields]

UNCLEBUCK, I would stay away from the disclaimers.   They wont hold up in cort and they plant the thinking in your customers head that maybe he could sue and get something from you.   This is what I found from years of using them in the towing business, don't matter what the disclaimer says if you took money to do something it will not stand in cort.
Andy

[Sawyerfortyish]

Furby my advice to you is the check with your insurance agent first. As an LLC you become an employee of the corperation and must pay workers comp on yourself and may not ever be able to collect if you get hurt. I know this because my brother and I became an LLC and got it up the @$$ with insurance  . What a mistake. Take out a liability policy you will be better off and save yourself a lot of paperwork and even money.

[Frickman]

Furby,
I agree with Sawyer40. One of the biggest sawmill outfits around here is a father/son partnership. They looked at forming a corporation to protect themselves and found out what it would cost. Even if they were incorporated it may not protect their personal assets, as they are involved with the company on a daily basis. For what it would cost to setup and maintain a corporation they can buy liability insurance out the wahzoo, which gives them the protection they are after.

I do know of LLC's that work for the owners. These are mostly companies that contract out all the actual work, like in trucking. A local trucking company is an LLC and hires owner/operators to do all the hauling.

[UNCLEBUCK]

Yeah I think youre right on that AD , I been thinkin about that all day and when someone pays with a check I will have them write in oats seed or agriculture on the memo , sure would be kind of hard to hand a form like that to someone and ask for a signature, just shows how inexperienced I am with the business side of life .

[Sawyerfortyish]

Uncle buck when I sell lumber I make out a bill and right at the top under my company name it states that {all products listed below sold by this vender are done so without further gaurentee} My attorney suggested I do this. I used to sell lots of scaffold planks I quit selling scaffold planks and started selling 2x8 or 2x10 what the customer uses them for is his problem. I would just make sure they were good before someone came to pick them up. As for taking cash that can cause other problems with the IRS. When you take in cash claim some of it. Thats one of the things that they look for when being audited.
 AD some times disclaimers help and sometimes they don't. Look at any bill from any lumber yard they all have some sort of disclaimer. I will say a good insurance policy is your best protection. With good judgement and common sense you can also many times avoid lawsuits. But then there's always that sue happy nut that will make me eat my words

[Brian_Bailey]

I looked into this subject for my business awhile back and was advised to stay a sole proprietor.
I was told the only reason to go into a LLC or S structure is for the tax advantages in doing so.
Structuring your business as a LLC  for the purpose of protecting your personal assets in case your LLC is sue'd won't hold up in court.
I was also advised it would be better to just purchase additional liability insurance (umbrella coverage).

Everyone has a different set of circumstances and should seek professional advice to see what's best for them.

Gosh, after reading some of the above comments, I was starting to think I was just whistling into the wind  .

A long time ago I was given some advise from a very successful businessman at a seminar. His advise to me was always consider the KISS principle when trying to decide on what to do. KISS means, keep it simple, stupid .

If your business just comprises of you, sole proprietor and liabilty ins. is the way to go. Remember KISS ?

If you are in partners with someone other than your wife, than an LLC or Inc. would be worth looking into.

[J_T]

Log sawing.20bf CASH Log sawing.25bf check

[Sawyerfortyish]

Where I am I can't start and wont bother to start the mill for .25 a foot. I very rarely do custom sawing but when I do it's 100.00 hr this includes cleanup if it's walnut or down time do to steel or whatever in the logs. Simple truth is I really don't want to do custom sawing I just don't have the time.

[ADfields]

Sawyer40, I've been to the mat 6 times over the years hoping my disclaimers that I paid good money to have written up would help and found otherwise.   I was informed by the last judge that "we have laws and it don't matter how you wright a disclaimer the laws all still apply" and that I would always be better off without one in the first place.   I took the mans free and unprompted advice and ordered invoices without a disclaimer and never found myself in front of a judge after that.  

I just went over about 50 invoices from different outfits and don't find a single disclaimer on them.   I find.
*Return policies
*Received by
*Due upon receiving
*Thank you
*No returns after 30 days
*Returned goods must be accompanied by this bill
*30 days net same as cash
And things like that.   I am shocked that I found none at all an all them invoices I have.    Not one of the old 100 or so word disclaimers that used to be at the bottom of every invoice you would get.   The old sold as is, no warranties implied, 29.9% interest on late payments and you pay the costs of collecting and all that.   It will not help and in fact can hurt you in court.
Andy

[Sawyerfortyish]

AD I've never been to court for anything except to collect money. I guess I must be doing something right or at least been lucky so far.  Just looked at a reciept from Radio shack on the back No warranty expressed or implied also Radio shack shall have no liability with repect to any person or loss or damage etc etc the first reciept I picked up. Surprizing tho a local lumber yard reciept didn't have one the second reciept. Third reciept says disclaimer on back and sure enough it takes up the whole back. There must be a reason some have a disclaimer and some don't I don't know. Like I said before good judgement and common sense helps many times avoid court.

[ADfields]

We were doing 10,000 invoices a year and you will find it don't matter what you do some of the 10,000 folks are jerks and want to hit the mother load on your insurance!   Do a $40 tow call on a $50 car and get a call from a lawyer 3 months later saying give us 10 grand and we won't need to go to court for that dent your guy put in the finder!   I don't miss it a bit but I did learn a thing or three when I was at it about how this stuff works.   Most folks are great to do business with but some would call us just like playing the slots, pull the lever and see what falls out!   It's not that I'm hard to work with, I was known to go WAY out of my way to have a happy costumer.   I did things like buy someone a like kind car in trade for one's we damaged if thats what they wanted to make them happy they called us but when the first call you get about a damage is from Dewie Cheetum & How!  

It used to be that you wanted a disclaimer on your invoices as most folks would look at that and think that it was worth something and leave you alone.   A kind of bluff if you will but far to many people today know it wont hold water.   But still it was such a common thing 10 years back that I was shocked to not find any in my invoices hear and am not at all surprised that you did.
Andy

[UNCLEBUCK]

thanks for the great info sawyer40 and a.d. ,  I wonder what the amish do about stuff like this ? the amish sawmill east of me is getting bigger every day , kids playing all around the saw shed , sawin for .15 cents and semi loads of logs coming in and out !   I am glad I am a slow norwegian !

[Sawyerfortyish]

You can't compete with the amish they work long hours for little money and I don't think they belive in insurance.

[Ron Scott]

No, the Amish don't believe in insurance. They are "self insured". It's "always fun" when I sell them a timber job since I require the producer to have workman's comp and liability insurance.

[Frickman]

Ron, I can't compete with the Amish when bidding on timber sales. Their overhead is so much lower than mine they can beat me any time they want to. Same thing when selling lumber, they'll undercut your price every time.

[ADfields]

Ron, do they have some kind of exemption in the laws?
Andy

[J_T]

A lot of largeCo are also self inshured. Any one can just got to prove you got a lot of cash or resorcs and be willing to pay if anything jumps the track.. In some states at least 50 grand bond inlew of auto inshurance was a long while back .

[Sawyerfortyish]

The state job I did about a year ago required a million in coverage for each accident.It was on fish and game land and had people all over the place. Got that done with no accidents and got out of there.

[UNCLEBUCK]

yeah I thought it was a good time to ask about my amish friends, sure are interesting people, I like everything about them except how they undercut .  

[J_T]

Yea they have low overhead. They make a buck they can keep nenteynine cents of it.No electric bill either.

[ADfields]

Ya, I well know about self unshared bonding.   But I would not think the Amish would have that kind of cash around and if they did I bet they would not tye it up in a insurance bond.   I worked with many self insured trucking company's and they all had insurance with a very large deductible, often $1,000,000 in case it got real bad.
Andy

[Haytrader]

Hey, the Amish have it figured out.
It is the bank and the finance company that REQUIRE the insurance.
If it is paid for, it is our chioce if we want to gamble.
I do my gamblin at home instead of Vegas or the C store tickets.  

[redpowerd]

hire the amish, they only speak of you in german
you git the jist of it when theyre mad

had a wide-brimmer that workd fo us a bit, bought 15 pounds of t-bakky a month for his pipe. mail order.
turns out he used his pipe for other things..........amish

had a HORSE trail to his safekeepins. one day i mowed and raked a pasture we gave him for his 10 or so cows. on an inspection of hay moisture i found his real crop. pretty mad i was. made him work real hard for a week, then let him and his famly go, and i told him why. sad. but, imagine gettin caught on that cash crop?

[acamar]

I used an on-line service that cost a few bucks, but made it all very painless, and they filed everything in my home state where I registered.   Talk to a good accountant; the value of these things are really rooted in tax issues.  The LLC allows a bit more freedom in moving assets into and out of the corporation.  Check out the tax treatment on assets that you have owned for a while and that you then give to the LLC.  Where land is concerned, there can be some very noteworthy tax considerations.  That's my two cents - good luck.

[Ron Scott]

They often get a waiver from the State Dept. of Labor. They will pool their resources among their group to cover any insurance needs in cash.

They will also have a producer who carries workmans comp and liability insurance do the timber harvest for them though they may be on the job also. I usually require them to go that route as they often don't have the most productive equipment, but will "front" the producer for his.

[Furby]

Can someone give me a little more info on the umbrella policy?
If I don't have a farm or business, how is it setup?
Who carries these policies, can I get them from my homeowners Ins. carrier?

[DouginUtah]

Furby,

This subject came up on the Yahoo milling group a few days ago. Here is what Dennis had to say:

A common misconception & maybe a bad choice of terms by the insurance industry.

An umbrella does NOT add ANY additional COVERAGES!

It DOES add additional LIMITS for the underlying policies, typically for the homeowner, the home and auto policies. In other words, if you have the coverage in your home or auto policy for say, $300,000 and you also have a $1 mil umbrella, you now can have a $1.3 mil problem and have your insurance take care of it without digging in to your pocket, provided it is a coverage already in your homeowners or auto policy.

So, NO ADDITIONAL coverages, just higher limits.

I have one and recommend it to all because I think it's a great buy and for most folks it's the only way to get over $1 mil liability (most homeowners and personal auto policies won't offer $1 mil or over).

-Doug