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LLC Or Partnership???

01-19-2009, 07:04 PM
#1
Joined: Oct 2008
Location: In My Head
Posts: 3,358
LLC Or Partnership???

Hey this is a question for the dev's, I just got my powermac g4 and I'm ready to start developing... Just wondering how to start the actual business if anyone knows, it's just me and my best friend, anything else we need we will sub-contract out work, so it's just me and him in the actual business. I was wondering do i need to start an LLC or partnership for tax purposes? I know I can just pay my $100 to apple and start selling, but what could the reprecussions be if I haven't formed an LLC or partnership? Any help would be much appreciated...

Gamecenter:1337brian
01-19-2009, 07:48 PM
#2
There are different elements to the question, primarily legal and taxation.

On the legal side, you'll want to work out exactly how you and your friend will run the business. Who does what, who owns what etc. Whether you go for a more loose partnership or register as a company, it's a very good idea to work out a contract that states who's liable for what. Well worth consulting a lawyer for that angle. It sounds a bit clinical when it's your best friend you're working with, but if you've got a good contract that says that neither of you can rip the other off or leave each other in the lurch when money is owed it stops a lot of arguments and makes it easier to stay friends.

On the money side, I'm not sure if it's the same in the US with an LLC, but a limited company here in the UK has all sorts of different benefits and different levels of tax from a sole trader or partnership. It also has a lot more red tape, but may well be worth it. Again, professional advice from an accountant is worth the money here. A limited company here also has the advantage that the company works as its own entity with you as directors (effectively employees), so that if everything goes horribly wrong you're only liable for the money you invested in the company, not your personal assets. Not sure if that's the same in the US, but your accountant can tell you that.

If you have a local business advice bureau they may well be able to give you some really good advice on the pros and cons of the different company setups, especially where any local/state laws may apply.
01-19-2009, 07:58 PM
#3
Joined: Oct 2008
Location: In My Head
Posts: 3,358
Quote:
Originally Posted by Zwilnik View Post
There are different elements to the question, primarily legal and taxation.

On the legal side, you'll want to work out exactly how you and your friend will run the business. Who does what, who owns what etc. Whether you go for a more loose partnership or register as a company, it's a very good idea to work out a contract that states who's liable for what. Well worth consulting a lawyer for that angle. It sounds a bit clinical when it's your best friend you're working with, but if you've got a good contract that says that neither of you can rip the other off or leave each other in the lurch when money is owed it stops a lot of arguments and makes it easier to stay friends.

On the money side, I'm not sure if it's the same in the US with an LLC, but a limited company here in the UK has all sorts of different benefits and different levels of tax from a sole trader or partnership. It also has a lot more red tape, but may well be worth it. Again, professional advice from an accountant is worth the money here. A limited company here also has the advantage that the company works as its own entity with you as directors (effectively employees), so that if everything goes horribly wrong you're only liable for the money you invested in the company, not your personal assets. Not sure if that's the same in the US, but your accountant can tell you that.

If you have a local business advice bureau they may well be able to give you some really good advice on the pros and cons of the different company setups, especially where any local/state laws may apply.
Awesome, Good advice, We do have a local bureau, I guess that's where I will start. Thanks Z!

Gamecenter:1337brian