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Old 27th September 2009, 02:12 AM   #1
Salt
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Question Create LLC Before Product Launch?

If anyone can help me out with this question it would be much appreciated. I cant seem to find an answer.

Is it possible to create an LLC a year or so before actually conducting business or recieving taxable revenue from products sold?

Basically I wanted to create an LLC (secure my company name), file for a tax ID number, open a business checking account and use that account to build my start-up funds as they are coming from multiple sources (Investors, Loans, ect) at different times.
Like I said, there will be no manufacturing/selling of products or goods for a year.

Would it be possible to list the physical address as my home and change it as soon as a manufacturing facility is found? Would this cause any problems? I eventually plan to change to an S corp down the road. I know this is doesnt look too good to Investors or Banks but for the time being, this isnt an issue.


Will this situation create any tax issues? Is this a bad idea? Is it even possible?

I live in PA and probably with over the course of a year there will eventually be close to $100,000 in this account.

Does anyone see any probelms?

Thank you.


Last edited by Salt; 27th September 2009 at 02:22 AM.
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Old 29th September 2009, 12:21 AM   #2
debbystewart
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I also live in PA and I don't think any problem with it.
You can open an LLC anytime. When you file for taxes, you can report earnings of $0 if you haven't made any money.
I would try to register the LLC in delaware. You can still do it even if you live in PA.

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Old 29th September 2009, 03:42 AM   #3
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Quote:
Originally Posted by debbystewart View Post
I also live in PA and I don't think any problem with it.
You can open an LLC anytime. When you file for taxes, you can report earnings of $0 if you haven't made any money.
I would try to register the LLC in delaware. You can still do it even if you live in PA.
Thanks for sharing your opinion, it will surly help me a lot.

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Old 29th September 2009, 06:52 PM   #4
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Thanks for the replies. Does anyone know if regularly putting money into this business checking account and then withdrawing funds for different aspects of start up such as Logo Creation/Marketing/Content Creation would be a problem with the situation listed above?

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Old 30th September 2009, 02:17 PM   #5
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You shouldn't have to go through the expense and hassle of starting an LLC at this point. You can register your business as a DBA with your local county offices (sole proprietor) so that you can open your business checking account. You can use your home address for the business address. You shouldn't need to start filing taxes until you actually start operating as a business. Check with an accountant on that.

You can use your bank account to deposit and withdraw as needed.

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Old 9th October 2009, 10:22 AM   #6
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Careful with LLC. Consult with a lawyer first. I did a few years back and basically his concern with LLC is that this is relatively very new and there is not one case built on it yet. Therefore, the benefits of a LLC is not fully realized and uncertain right now.

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Old 9th October 2009, 12:48 PM   #7
robertson240
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Of course you can start an LLC before doing anything with the biz. It is called a shelf corporation. People pay big money for a shelf corp. I would suggest setting up the LLC as soon as possible because a year old business looks a lot better to an investor or lender than a brand new 2 week old corp, and they judge by the date the LLC is filed. I would also suggest getting some accounts in the business name and building a strong business credit score for the LLC. This will help you exponentially in the long run.

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Old 11th October 2009, 10:32 AM   #8
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Quote:
Originally Posted by robertson240 View Post
Of course you can start an LLC before doing anything with the biz. It is called a shelf corporation. People pay big money for a shelf corp. I would suggest setting up the LLC as soon as possible because a year old business looks a lot better to an investor or lender than a brand new 2 week old corp, and they judge by the date the LLC is filed. I would also suggest getting some accounts in the business name and building a strong business credit score for the LLC. This will help you exponentially in the long run.
What if this is converted to an S or C corp down the road. Will the registration date stay the same or will it "reset" so to speak? Will everything transfer over in terms of lines of credit and accounts?

Basically what do you think I should do in terms of a shelf corp considering my situation. Go the easier LLC route or go the full on S corp and "do it right the 1st time". An S corp seems a little more trouble to maintain for just one person, though I dont mind the extra work if it will be better in the long run considering I want to convert when its time to launch. Would a shelf S corp be worth it at this stage?

This information helped me out tremendously.


Thank you for the great information gentlemen.


Last edited by Salt; 11th October 2009 at 11:46 AM.
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Old 13th October 2009, 06:29 PM   #9
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You can always transfer to an S-Corp down the road, not to difficult at all. There are forms with your Sec. of State and a small fee that varies from state to state. I always suggest to single business owners to start as an LLC because it is very simiilar to a Sole Prop. and easier to maintain by yourself. With the S-Corp there are tax issues that I do not even want to get into right now, but I am sure you are aware of.

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Old 13th October 2009, 11:58 PM   #10
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Quote:
Originally Posted by robertson240 View Post
You can always transfer to an S-Corp down the road, not to difficult at all. There are forms with your Sec. of State and a small fee that varies from state to state. I always suggest to single business owners to start as an LLC because it is very simiilar to a Sole Prop. and easier to maintain by yourself. With the S-Corp there are tax issues that I do not even want to get into right now, but I am sure you are aware of.
As I suspected. I'm sorry to be bothersome, but do you know if the date of registration will carry over?

Say I make a shelf LLC in October 2009. March of 2011 rolls around and I decide it time to go the S-Corp route. Will all the time with the LLC be wasted? Will it be like starting over so to speak? Im sorry to be up your ***, I cant seem to find this out.

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