I'm setting up a small internet business for my wife to sell jewelery via the internet, fund raisers, festivals and possibly karate school displays. I've been reading up on what the best tax ID is and it seems an LLC would serve us well. I would like to put the business solely under her name, setup a P.O. Box for all billing and legal. Then I plan to have all product deliveries drop shipped to our home, otherwise it would go directly to the customers. I am looking at setting up a separate business checking account to handle all our business finances. Are there any other tings I should be thinking about to help keep personal finances and personal liabilities separate from the business. I want to reduce most if not all legal issues from rolling over into our personal financial investments.
You put your finger on one of the most important: keeping the entity finances separate from your personal finances. Never use the LLC checkbook to pay personal bills. You should transfer the funds from the LLC to your personal account as a distribution of earnings and then pay the personal bills from that account. Also you should get liability insurance for the LLC. You should also have an annual meeting with Minutes or good notes, even though it’s not technically required by the statute. It will help maintain the separateness of the entity from your personal affairs, a good defense from an attack to “pierce the corporate veil.”
DISCLAIMERâ€”This answer is for informational purposes only under the AVVO system, its terms and conditions. It is not intended as specific legal advice regarding your question. The answer could be different if all the facts were known. This answer does not establish an attorney client relationship. I am admitted only in California. (Bryant) Keith Martin sbbizlaw.com
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You should talk to a competent CPA or business lawyer in Indiana to determine whether, under state law, an LLC; "S" corporation; or some other form of business is most appropriate. To help you make that decision that professional will need to know all of your goals and objectives. You cannot get the advice about the best form of establishing your business from (i) lawyers who do not practice in Indiana; and (ii) the internet. For example, that professional might advise you that you do not need an entity at all, that a sole proprietorship operating under a fictitious name (DBA) might be sufficient.
No matter the form of business, including a DBA, you need to maintain separate bank accounts with separate federal taxpayer ID numbers. You should set up a separate set of books and records, e.g., using Quick Books. You should have a separate liability insurance policy for the business. You should have separate business cards; stationery; phone number; location or P.O. Box; web site; etc. You may even want to consider doing some personal asset protection planning, e.g., transferring your residence to a qualified personal residence trust; transferring your personal liquid assets to a Nevada asset protection trust; transferring your other investment assets to a family limited partnership with a corporate GP owned by an irrevocable trust for the benefit of your heirs.
So, yes, there are many things to consider. Do that analysis with a competent local professional. Spend a couple of thousand dollars to get it right.