LLC Filing and Foreign Business

[David York]

I am trying to file as an LLC, but I have discovered that the state of Washington requires at least 2 members to form an LLC and I don't have or want a second person.

Does anybody have experience with filing in another state as a foreign LLC? Do you recommend this, or is there some way I can/should take on a second person (such as my brother) and restrict their rights via by-laws or something similar? I'm not sure what the best way to proceed is.

Thanks a lot.

[merovingian]

I am trying to file as an LLC, but I have discovered that the state of Washington requires at least 2 members to form an LLC and I don't have or want a second person.

Does anybody have experience with filing in another state as a foreign LLC? Do you recommend this, or is there some way I can/should take on a second person (such as my brother) and restrict their rights via by-laws or something similar? I'm not sure what the best way to proceed is.

Thanks a lot.

Is there a reason you're not filing as a Type S Corporation? Just curious. 1120S is a pretty simple form for taxation since you shell all your earnings out as either expenses or wages.

Taking on a second person will require phantom dividends to them unless you're totally paying yourself by salary. And when and if you liquidate your assets, the same issue.

I suppose you could issue them one share. That would do a pretty good job of restricting their voting rights.

Good books to look into:

Inc. Yourself
Incorporating Your Business for Dummies
Keeping the Books

[Dan MacDonald]

Really David? I just filled out a form online, paid my $20 and registered an LLC with the state of washington. I am the only member of the corporation. I do my contracting work though this entity, pay my taxes, never had a problem with it.

[David York]

Dan - thanks for getting back to me. I am using the form at www.secstate.wa.gov ( http://www.secstate.wa.gov/corps/forms/llc.pdf ). Also, I have a book with an appendix stating that the state of WA requires 2 or more members, but I haven't verified it with the state. What form did you use? I'd love to hit it, $20 and solo sounds great.

merovingian - thanks for the feedback, I appreciate your advice and the book references. I chose an LLC because it seems to fit my needs the best. C-Corp and S-Corp don't seem necessary. It was also the company type that a few successful friends of mine have recommended.

[milieu]

I found this description of an LLC on the Secretary of State's web page (emphasis mine):

http://www.secstate.wa.gov/corps/registration_structures.aspx

The Limited Liability Company (LLC)* and the Limited Liability Partnership (LLP)* are the newest forms of business structure in Washington. An LLC or LLP is formed by one or more individuals or entities through a special written agreement. The agreement details the organization of the LLC or LLP, including: provisions for management, assignability of interests, and distribution of profits or losses. Limited liability companies and limited liability partnerships are permitted to engage in any lawful, for profit business or activity other than banking or insurance.

I think that book has incorrect or outdated information. A lot of states used to have the 2-person rules for LLCs, but most have changed that to allow 1-person LLCs.

[David York]

Thank you milieu, that was fantastic. I believe you are correct in your guess that my book was out of date. BTW - I noticed you are from Bellingham. I went to Western, it's amazing how that place can grow on a person. Have a potato burrito at Casa for me!

[David York]

I was able to file online (thanks Dan, I didn't know that was an option). Unfortunately, filing online was the same price as the paper version. Maybe a bill passed on the 2nd or something. Anyway, it was $175, but it's just me with no partners. Thanks for your help guys.