LLC FAQs by Industry or Activity

Am I practicing law if I request WPAL's formation services for my client?

No. Creating a corporation, forming a limited liability company or other business entity involves paperwork, but it does not necessarily require legal expertise or advice. You provide your clients with the information they need to make an informed decision about the formation of a business, for example, what type of entity to form based on their tax situation. Why Pay a Lawyer? handles the paperwork, including filing the documents with the state, to set up the LLC. WPAL tailors the LLC to your specifications.

 

How can outsourcing work to WPAL benefit my law firm?

Your law firm can spend more time researching the law, and more efficiently doing things other than filing out incorporation paperwork by outsourcing to WPAL. Small law firms often find it cost prohibitive to hire an additional employee and would prefer to outsource specific work WPAL. We can help your practice grow while saving you time and money.

 

Does WPAL offer any assistance with compliance requirements?

Compliance assistance is a major area of focus for WPAL. Each LLC client receives an easy-to-follow checklist of steps to take to meet state compliance requirements.

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Can WPA obtain Employer Identification Numbers for my clients?

Why Pay a Lawyer? can secure an EIN number with a complete LLC set up or as an individual option for a fee. We will prepare the form, and send it back to you. We require signature on the IRS forms before they can be processed.

What if I need to register to do business in additional states?

An LLC having business locations in multiple states may form a corporation or LLC in a single state, then "qualify to do business" in other states or, one LLC or corporation can set up other subsidiary LLC’s or corporations. “Qualifying to do business” means companies need to formally register, file annual reports and pay annual fees to obtain authority to conduct business in those states. Why Pay a Lawyer? can assist in qualifying in any state.

Is forming an LLC the right choice for my arts or entertainment business?

Persons in the arts and entertainment industry can protect personal property like their house, car or savings account from their preferred or vocational endeavors, and gain many tax advantages from these ventures. Call us.

Could forming an LLC help me attract investors?

An LLC may be beneficial to those who are seeking to raise investment funds. LLCs often issue membership interests in the LLC to investors in exchange for money or property, and the investors become members of the LLC. Word of caution: securities laws could be implicitated here. Call us on this one.

Where do business owners typically form their LLC?

Many business owners form their LLC in the state where their company conducts, or intends to conduct, the majority of its business, or where they state.

Do I need to form an LLC to bid on federal or state construction jobs?

Most federal or state jobs require a contractor to be bonded, and insurance companies providing such bonds may prefer to deal with LLCs or corporations rather than individuals.

Will my business need Workers' Compensation insurance if my business is an LLC?

Workers' Compensation laws vary significantly by state, and whether a company is required to obtain Workers' Compensation insurance will depend upon statutory law where the work is being performed. Generally, if a company has one or more employees, it will be required to obtain and maintain Workers' Compensation insurance for its employees, regardless whether it is an LLC or not.

Does an LLC need business insurance?

LLCs purchase and carry business insurance to provide liability and other protection for their business. Personal or homeowners insurance will not provide sufficient protection for even a small, home-based consulting business.

Which entity type is best for real estate?

Although both an LLC and a corporation can help protect an investor from real estate liability, most investors choose an LLC to hold their investment real estate. An LLC can offer more freedom for the management, does not require corporate formalities like annual meetings, and enjoys pass-through taxation at the federal level.

How do I transfer real property into an LLC?

To transfer real property to an LLC, a deed is prepared in the LLC's name and filed and recorded in the appropriate office(s) located in the jurisdiction in which the property is located (usually the county recorder’s office).

What registrations are required if I transport cargo from state to state?

Under certain conditions, a company that engages in interstate commerce will need to apply for and obtain a United States Department of Transportation number and possibly a Motor Carrier (MC) number. The Federal Motor Carrier Safety Administration and Surface Transportation Board generally regulate carriers. Additional information can be obtained from www.fmcsa.dot.gov. You can do all these as an LLC and get all LLC benefits.

How do I transfer ownership of my vehicle to my LLC?

The law of the state where the vehicle is registered determines ownership and transfer of ownership of a vehicle. You should consult the applicable state motor vehicle department for details regarding transfer of ownership and registration of vehicles. Sometimes the lender on the vehicle will have to approve the transfer of title.

 

How is my LLC to be taxed?

For U.S. federal income tax purposes, LLCs that are treated as partnerships use IRS Form 1065. However, the members (the LLC’s shareholders or partners) may elect for the LLC to be taxed like a corporation (taxation of the entity's income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members).

Operating the LLC as a partnership does not mean that U.S. federal partnership tax forms are not necessary, or not complex. As a partnership, the entity's income and deductions attributed to each member are reported on that owner's, or member’s, tax return.

The tax label "disregarded entity" for income tax purposes singles out the one-member owner of an LLC as actually earning the LLC income and deductions directly. An LLC passively investing in real estate and owned by a single member would have its income and deductions reported directly on the owner's individual tax return on a Schedule E tax form. And an LLC owned by a corporation--in other words, an LLC with a single corporate member--would be treated as an incorporated branch and have its income and deductions reported on the corporate tax return.

• Read the General LLC FAQs