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Markus May
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Markus May’s Answers

111 total


  • Using a pseudonym when registering an S-Corp

    I would like to register an S-Corp in the state of Illinois using a pseudonym or a different name entirely because of some personal family issues. it isn't to evade taxes or anything just to avoid some hassle due to being part of a family. Anyways...

    Markus’s Answer

    Hmmm... looks like more info is needed. If you are forming a new corp, then you can choose any name. If you are registering an out of state existing corp to do business here, then you would need to register that company. But you could perhaps change that company name out of state and do a dba in prior state under that name and register the then true name here. Not sure if you could just register the dba here (assuming you chose to just set up a dba there). There are usually other facts that may impact things that haven't been shared, so I suggest hiring an attorney.

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  • Can I just stop using my DBA?

    I run a very small business on etsy. I no longer wish to use my DBA and only operate under my legal name. My DBA expires in 2019. Can I just stop using it and let it expire? I know I should go through the process of canceling it, but I don't have ...

    Markus’s Answer

    I'm not your attorney and this isn't legal advice for you, but I would tell my client asking this question that yes they can stop any time and I see no reason to cancel the DBA. You already paid for it for 5 years, so just let it sit out there and you can use it if you want to in the future. Plus this keeps someone else from taking it and getting confused with you. .

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  • Question about incorporating in Illinois!

    Hello, I want to incorporate in Illinois, the online application is fairly easy but I'm not sure how to answer the following!! 1- Number of shares Authorized: 2- Number of shares proposed to be issued without further report to the Secretary of...

    Markus’s Answer

    Did you know an LLC can be taxed as an S-Corporation and not have to do the annual minutes? For that reason alone, you should seriously consider an LLC. Can also be taxed as a sole proprietor and you can put more in retirement than if you play the S-corp. "reasonable compensation" game, but that is a discussion for you to have with your business lawyer. I disagree with only a "modest" amount of initial consideration. That can later lead to a "piercing the corporate veil" claim if the company was initially under capitalized. See articles on the web related to that topic. If you don't set it up right now for the future, it will likely cost more to fix later. Tax consequences if go from s-corp. to sole prop., or partnership, etc.

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  • Running band business as an individual. Do I need to register with state as sole proprietor?

    We have income from live performances and merchandise sales. Incoming money is deposited into separate bank account set up for band. I pay the members from this and plan to issue them 1099's. Annual income less than $20,000 Do I need to registe...

    Markus’s Answer

    Do your performers agree that this is a sole proprietorship and do you have a written contract to that effect? Or do they possibly look at this as a partnership and they would make a claim in the future for the profits? Make sure the agreements are in writing. Also, consider that as a sole proprietor you will have individual responsibility / liability for anything related to the operation of the business. So the band is travelling to a gig and the driver runs a stop sign and kills someone - since the driver is on company business, the company is liable. Which means you are liable. Or a band member does a wrongful act while engaged by the band (jump into the crowd? sex with a fan (construed as rape)? etc. So consider whether you want to create an LLC or corporation to obtain limited liability protection. Also, consider getting insurance to cover potential liabilities. As to tax liabilities, contact an accountant and also consider potential employee vs independent contractor issues - check out the recent IRS guidance from last year.

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  • Do you recommend I use LegalZoom for my LLC incorporation, knowing that I might have new team members join in the future?

    I want to set up my LLC in Delaware for my startup. I am currently a sole founder with team members assisting me during the summer. In case I see that they are serious about the company and committed, I will ask them to join the team officially wi...

    Markus’s Answer

    You are having physical activity in Illinois. You have bodies doing work here. That is enough for you to be required to be registered with the state. However, being a Delaware LLC makes sense for a number of other reasons possibly. Then you just register it here. Most good business attorneys will have a 10 page or more checklist to walk you through with regard to your multiple member LLC and will custom design your operating agreement to what is desired. Or you can go to Joe Schmoe and he (or Legal Zoom) will give you a generic multi member LLC operating agreement and ask you if you want any changes to it. That is essentially asking someone who doesn't know what they don't know to give a good opinion.

    I suggest you make the wise decisions up front and don't try to fix it later. It usually costs more to fix later. Especially when you get in to the tax elections up front and if your LLC is taxed as an S-Corp., C-Corp or sole prop./partnership and you want to change later, there are a lot of implications to consider.

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  • Can I open an LLC in a different state than where I live if I'm selling online clothes all over the US with no physical store?

    I am starting an online retail business (selling apparel online to many states in the US and a part international) with no physical store. The production factory (which will store the clothes for a few days between the time they finish production ...

    Markus’s Answer

    You should register in Illinois in any event as you are doing business here. I usually recommend staying with the LLC as it only costs $150 more per year than a corporation (with a smaller amount of capital), but then you don't need to do annual minutes. Most small businesses fail to do the annual minutes and then open themselves up to a potential piercing the corporate veil claim. LLC's don't need to comply with corporate formalities of minutes in Illinois. Also, the LLC can choose to be taxed as an S-corp. or as a sole proprietor,,,,and the pros and cons of that are too long to discuss in an online forum such as this.

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  • How to reinstate corporation

    I had a corporation that I let get dissolved by the state about ten years ago because I didn't need it anymore. Now I would like to use it again. It looks like I could reinstate it, but there would be a lot of fees and forms. Can I just sign up a ...

    Markus’s Answer

    Why use the same name as opposed to a different name? Think through that and if there isn't a good reason, consider going with something new to avoid any confusion.

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  • What are the steps to forming a C-Corp in Illinois?

    C-Corp in Illinois

    Markus’s Answer

    To form it, all you need to do is file Articles of Incorporation with the Secretary of State. Not sure why you would want a C-Corp though with its double taxation. After going over pros and cons of the various entities, most clients are going with LLC's these days - taxed as a sole prop/partnership or an S-corp. Very rarely going with a c-corp.

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  • Can I make a taxable gift to my son of a 50% share of initial LLC capital contribution?

    I am forming an LLC with my son to purchase a rental property and possibly more rental properties in the future. I will be contributing 100% of the capital but he will be running the business of the LLC and also he will be managing the properties....

    Markus’s Answer

    Generally speaking you can gift as much as you want. You may need to file a gift tax return, but gift tax may not be owed. Talk to your tax advisor regarding this. Someone else mentioned a loan and that is certainly one way to go. You also need to consider what an adequate amount of capital would be to start the company to avoid a piercing the corporate veil claim. I generally suggest 3 months of operating expenses - note, it would not necessarily have to be the full $150,000. So you could potentially capitalize for $30k with you son and you each putting in $15k and the rest being a loan. Also, you could buy the whole thing and just gift ownership interests each year (may require valuations and discounting so that may be more complicated) until he owns 100% - and as someone else mentioned, if you are married, your spouse can also gift. Probably a number of other ways as well, but not going to spend more time thinking of them. You really should hire a lawyer to help with this. It's not just chump change you are dealing with and if you plan to deal with multiple properties, that requires additional planning as well. .

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  • Do I need to register my company with the State of Illinois?

    I own a Pennsylvania LLC Sole Proprietorship but I reside in Illinois. I do not sell goods only services.

    Markus’s Answer

    If you are doing work only here and not in PA you will want to consider closing down the PA entity (and starting a new one) or merging it with an IL entity if it is expensive to keep it going in PA (e.g. your annual filing fee and registered agent fee, if any). Note be careful closing it down if you have contracts, retirement accounts, etc. that you want to have continue.

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