Transitioning to LLC - Need advice

[LaurasLastDitch]

I need to transition from a sole proprietorship to a single-member LLC. I've filled out the paperwork, but I haven't sent it in yet. Even though I've been claiming my income for years, I don't even have a separate business bank account. I don't know what to do. I have neither an accountant nor a lawyer, and hope to keep it that way, if possible, as they would cut horribly into my lackluster income.

A few questions I specifically wonder about:

1. Do I need a new state tax ID number?
2. Do I need to change the name on my Etsy account, and on the other sites I use for selling?
3. What do I do about my Paypal account?
4. Should I open a business bank account first, or file the LLC first?
5. What about filing my taxes? Do I need to do anything special in the year of transition?
6. Anything else anyone can advise to make this transition easier, or any other considerations I might not have thought of?

[sunshineandvodka]

Hi,
I just did the same thing on September 24th. I hired a lawyer so it was correct the first time. Here are some answers from what I learned.

1) yes
2) I don't think "LLC" matters for your shop name but I did change my DC account.
3) contact PayPal but change your bank account because you HAVE to run ALL your business through a separate account that is ONLY for your business. You need your federal EIN ID to open it though.
4) LLC first
5) you file a schedule C with your regular taxes.
6) business insurance...small fee but worth it. Write up a lease agreement for your space you use if its in your home, if you want to deduct a portion of your expenses. Anything you personally own, sell it to your company with a loan so you make the money back. Remember, this is not YOU anymore, it's a business so you have to think of it like that. It's all a loan right now that the company has to repay you at some point. Legally anyways...

[Former_Member]

I am looking into this too but there are a lot of resources to talk to about small business issues.

SBA.gov has a lot of them..

SCORE
SBDC

I think they are all free as well.

[LaurasLastDitch]

Thank you, Paulette and Traci!

Paulette, did you start a single-member LLC? From my research, it looks like you don't need an EIN, which makes me wonder if perhaps you have other members of the LLC. I'm just hoping that possibly with a single-member LLC it might be less complicated than what you're describing.

[sunshineandvodka]

Yes, I'm a single member LLC and I do have an EIN so I don't have to use my SS#... I'm unsure if it's 100% necessary but it's certainly safer and easy to do.

[OrangeDogCrafts]

An EIN is not required for a single-member LLC. However, it is very easy to get one & does not cost anything. Also, like Paulette said, safer than handing out your SS#. Maybe this link will help.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Do-You-Need-an-EIN%3F

[LaurasLastDitch]

Thank you for the help, everyone!