Structural Engineer Company Setup LLC question 2

[mfstructural]

I am interested in setting up an engineering company. I have been doing research lately and have found 2 different LLC types. There is the regular LLC and the professional LLC (PLLC). Some claim the PLLC is necessary for practices requiring licenses, such as engineering, lawyers, etc. A friend of mine didn't use a PLLC but because of that he has the checks for his jobs written in his name ( I think that's what he said). In any case does anyone have any experience with this? What company structures do you use?

 

[SteelPE]

How many people are you working with and how large do you plan on growing your company? Also, what are you trying to protect yourself from?

I was originally set up in a PC with my business partner. After he passed away about a year ago I have since formed a new company as a sole proprietor. I have no wishes to employ other people other than as sub contractors. I talked to a few people about it and they basically said that a PC offers no protection against lawsuits since a skilled lawyer can easily pierce the corporate veil and get you personally for mistakes. I'm sure others will strongly disagree.....In the future if things work out I may decide to for again under some sort of corporate veil.

 

[DRWeig]

PLLC vs LLC regulations vary from state to state and country to country. For example, my state defines only LLC, there is no such thing as a PLLC here. All LLCs here are LLCs, professional services or not.

Best idea is to check with an accountant or attorney in your location.

As far as the US federal government is concerned, PLLC is the same as LLC. They call you a partnership, sole proprietor, or corporation, depending on your declarations.

I agree somewhat with SteelPE, but not totally. Protection varies by location too, unless the case goes to federal court in the US. According to our attorney, with only one or two members, an LLC is more vulnerable to "piercing the corporate veil" under state law in the event of negligence, errors, and omissions. That's why we buy insurance, just as a sole proprietorship or corporation should. However, financial protection for the members in the event of non-professional liability that does not involve personal malfeasance is pretty tight for defaulting on loans, bonds, or other debt instruments, and employee injuries and other stuff. Again, the level of liability limitation varies from state to state in the US, and from country to country around the world.

Good on ya,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies

 

[Rye1]

I set my company up as a PLLC. I would suggest that you take some of the small business classes at a local community college. These classes are usually free and are very very very helpful. PLLCs and LLCs include some of the good things associated with PCs and sole proprietors. PLLCs are money pass through organizations like sole proprietors and offer legal protection like PCs. A PLLC must be treated as its own entity. It must have its own bank account. Because my company is set-up this way, all work is completed by the company, all checks are made out to the company, all invoices are sent from the company. NOTHING is in my personal name. I work for the company. A crafty lawyer may be able to pierce the corporate veil - but it would be difficult.

Robert Billings

http://www.newrivereng.com

 

[McLJ]

Like DRWeig said, "PLLC vs LLC regulations vary from state to state and country to country."

Quite frankly, this is a question to ask your lawyer and accountant. In addition to legal questions, there are tax questions to be considered as well. I consulted both before setting up as an LLC.

Good luck with your new venture - it is an adventure for sure.


LJ

 

[SLTA]

I'm an S-Corp, for ease of taxes, according to my lawyer and tax guy. Try SCORE, if they're in your neighborhood - a bunch of retired executives that are great at helping companies get started. They also have workshops about marketing, accounting, etc. But yeah - the best option is to talk with your lawyer and tax guy. Good luck!

 

[IRstuff]

slta,

So how are the taxes easier?

TTFN
faq731-376

 

[Rye1]

My company is a PLLC and I file taxes as a S Corp as well. This is accomplished by filing SF 2553 with the IRS:

http://www.irs.gov/businesses/small/selfemployed/article/0,,id=205014,00.html.

This essentially makes the taxes easier because an "S" corporation is a pass through structure. You report retained earnings on your personal tax return.


Robert Billings

http://www.newrivereng.com

 

[SLTA]

Rye1 hit it. And today, I'd say they aren't easier at all, seeing how frustrating it is to try and figure out payroll taxes. But I'm paying myself, so woohoo!

 

[IRstuff]

I guess it's moot for my case. California doesn't allow for professional LLCs.

TTFN
faq731-376

 

[MiketheEngineer]

Get a lawyer ---- You are asking a bunch of engineers questions way out of our league.

 

[TomDOT]

Mike's pretty much right. This group should be able to (and did) relate some personal experiences, pointed you to potential local resources such as SCORE.

After exploring the resources, if you still want to go forward it is time to get a good small business lawyer.

 

[IRstuff]

Lawyer AND tax accountant; they're both required, because that's where the impacts occur.

TTFN
faq731-376

 

[TomDOT]

I'd talk to the lawyer first, verify viability and concerns from his side, then find the accountant and verify viability and concerns from HIS side. Personal preference to do one at a time.

I fully agree both are needed before actually launching.

 

[glass99]

Assuming you have E+O insurance and you are a one or two man band, how much protection does incorporation really provide? I ask because here in New York City being a corporation implies paying NYC corporate tax, even if you are an S-Corp. This means an additional 8.875% of your salary + profit, which becomes a very significant expense.