Starting An LLC

[justamonkey]

i want to start a horse ranch, so i will be creating an LLC. when i do that, and i want to actually buy the ranch, do i use my current income from my job to qualify for the loan? note: i will be slowly building up the ranch by attracting boarders, teaching lessons, etc, so there will be no official "income" when i buy the ranch to begin with.

[lunartcorp]

I think you cannot avoid giving them your information as banks will ask for it anyway just to make sure who to look for when the business is not providing the payment.
Regards,
Jose

[justamonkey]

is there a way to set it up without going the "s" or "c" corporation route that would protect me from being personally responsible for possible business failure?

[rebecca.volitio]

justamonkey,

Hmm... I think the LLC would be the best way for you to go at the beginning. Until you are making pretty decent revenue, a 'C' or 'S' corp just costs you more money to file and do taxes for without giving you much added protection.

But if you set up the business as an LLC, then use a personal loan to get the money to buy the place and have your LLC borrow the money from you (which you get from the bank and I think you'll need to have official loan papers drawn up by your CPA), then you can have the LLC 'own' the property and 'owe' you the money.

I think that will work. By the way, I'm not an attorney, I only know just enough to be dangerous. There might be a simpler way, but I think that could work.

Good luck!
Rebecca

[justamonkey]

thanks folks, this has been helpful...i'll ask some more later, count on it

[rdc]

An LLC will in theory shield you from personal liability just as an S-Corp or C-Corp would. However, LLCs are less tested in the courts, and in cases of single-member (single-owner) LLCs, the entity is sometimes disregarded and courts can pierce the veil.

The LLC is simpler to operate than a Corporation, though... so if you must go this route, follow this general rule: keep your personal stuff and your business stuff completely separate. Run the LLC as if it were truly a brick and mortar business completely independent of your personal matters (accounts, etc). Keep a strict paper trail. And do NOT allow the business to be undercapitalized at any time. This gives you the strongest protection. Hope this helps some. If I can help with anything further just let me know.

[Bizdev]

I would suggest consulting an attorney before doing anything. Most people opt for LLC's believing they are protecting their personal assests. However, that protection is largely a falacy.

You will be asked to sign a personal guarantee at every turn. Especially will that be the case if you get a loan. Any business owner is basically forced to sign a personal guarantee by everyone from vendors, lenders, landlords, merchant account companies, etc., etc.. That personal guarantee overrides the so called "protection". You are still left wide open.

In many cases, it is not necessary to go through the expense and hassle of incorporating if you are only doing it for protection.

[mainstreet]

You are personally responsible for your project regardless of s or c corp or llc designation... Dont get distracted. It costs a few pennies more to have your taxes done properley.

[GetYourBizSavvy]

Definitely consult an attorney. Although they are expensive, they have the necessary knowledge that will greatly help you.