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ZPR
11-11-2011, 03:05 AM
Does anyone on Technibble have stories on converting from a DBA to a LLC in the US? I am debating a conversion to LLC next year, I've looked at the forms I file and taxes I will owe. But does anyone have any experiences like with vendors, banks, etc.

cprompt
11-11-2011, 10:06 AM
I converted to an LLC about 6 years ago. I filed the application with the state and paid the fee. Once I had the documentation back, I filed with the IRS for a new EIN. I then had to provide that EIN to the credit union where my business accounts are - they were able to convert the account instead of closing it and opening a new one. I also had to get a new Sales Tax ID from the state. I'm pretty sure I also had to get this information to my distributor (D and H).

All in all, it wasn't that big a deal. It was just a matter of staying on top of things for a couple of weeks and not forgetting to get things done.

ZPR
11-11-2011, 02:12 PM
That's what I figured, but what about the items your business had? I've researched it and one solution is to just have the current business's items be the starting capital for the LLC. How did it change your operation converting to one, or was it business as usual.

dgast
11-11-2011, 04:10 PM
You can hold your capital equipment at a value as owners equity and draw against it or hold the ownership personally and have the company pay you a lease for it, It really shouldn't matter to much because the taxes still flow through your personal taxes. That is how it was explained to me when I did it and we still hold everything personally unless we buy it with the business money. Don't forget to add or change your liability insurance and car insurance if you have signage on them.

RegEdit
11-15-2011, 05:48 AM
A DBA is simply "you" doing business under a different name. You don't really need to "convert" as much as you need to "set up" a corporation with its own brand new bank account. You could create a transfer and assignment agreement whereby assets are transferred from "you" to the corporation. This could be helpful in case someone were to sue the corporation. You want to establish what is yours and what belongs to the corp.

Are you freelance or do you actually have a storefront. There's been much back and forth debate about whether or not you should form a corp if you are just a freelance guy. At least in California where it costs $800 a year + at least another $300 in other unavoidable expenses (statement of information fee, TurboTax, etc), I say that incorporating (as an LLC, S-corp or otherwise) is overkill and paranoia.

ZPR
11-15-2011, 11:44 AM
I do freelancing but in the last few months I've been doing work for the county and for several businesses. I don't have a storefront at the moment. MY state does a tax on all LLC, Corp, LP, etc. involving limited liability, so long it's under 3 million a year the tax is $175/yr plus the SOS's annual fee, which I think is $15.

My income has been keeping pace with my Business Plan for the last 3 years so I figure I should convert before there is any serious assets, or any sue happy people.