Do I need an LLC?

[njValor]

What is the name of your state (only U.S. law)? Colorado.

I want to start building custom computers, but only in my local area. I don't plan to make a living, only some extra cash (I am a poor college student). I planned on meeting with a customer, determining the best parts for them, then having them order the parts to their own house where I will pick them up and build the PC within a couple of days. This way I will not handle any of their money until the end where they will pay me a commission fee based on the cost of the PC. I plan to offer a 30 day free service on the parts, but after that charge if the computer needs repair (faulty parts or construction errors will appear within a few days if they exist).

I have read up on LLC's and I'm sure I could start one, but I want to know if it is absolutely necessary. And if it is, can I act as my own registered agent?

 

[FamilyGirl]

You don't need an LLC to operate this business; you could be a sole proprietor. Why would you rather have an LLC?

 

[njValor]

Just for liability's sake, I suppose. How can I set up a payment contract or something if I don't have an LLC? I just want to make sure I don't get taken advantage of and don't get in any legal trouble.

 

[FlyingRon]

You are always personally liable for your actions. If you make a computer negligently and it catches fire you can still be held personally liable for your negligence even with the LLC.
You can move the financials into an LLC but you may find that nobody wants to deal with your startup without you also personally signing to be responsible. An LLC probably isn't too painful in Colorado, $50 to file and a nominal fee every year.

 

[FamilyGirl]

Have you researched the benefits of an LLC vs. a Sole Proprietorship? If you google that term, you'll find a lot of information. I think a clearer understanding of what an LLC protects it's members from will probably help you.

An LLC will not be a guarantee of protection from a poorly written or invalid contract for service. It's protection is not 100% absolute. If your contract for service is not set up properly and a customer sues you as a result, the Court could deem the contract null and void regardless of whether you have an LLC or not.

You don't need an LLC to have a contract for service, but you do need to make sure the contract for service you use is indeed legal and set up correctly. Have you taken a look at a contract from a business that offers a similar service?

 

[single317dad]

In my state, I found that trying to remain a sole proprietorship was a really big pain, and starting an LLC smoothed a lot of bumps in the road. For example, in order to obtain a federal employer ID, I needed to register my business with the IN Secretary of State. That process was much quicker and easier with an LLC; the process as a sole proprietor was quite convoluted. I was unable to get a business checking account without that federal EIN. Plating a company vehicle was a much easier process. One property manager wouldn't rent to me without a registered LLC or C/S-Corp. FMCSA is easier to deal with as a corp. The list goes on.

Note that none of these things applies to your legal situation, or even your state; just some experience of mine that may come in handy for you as you go forward.

 

[FamilyGirl]

I have a resale business and it is set up as an LLC because wholesalers wanted an EIN but mostly because I have a partner. You can use your own SS number as an EIN for certain things as a SP.

 

[davew128]

I have a resale business and it is set up as an LLC because wholesalers wanted an EIN but mostly because I have a partner. You can use your own SS number as an EIN for certain things as a SP.

Please stick to topics you know something about. Clearly business and tax matters aren't among them.

An SSN is NOT an EIN. An SP CAN have an EIN. I'd also point out to you that if the OP forms an LLC by himself that is STILL a SP.