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Single member LLC, questions, and is it worth the trouble to go legit?

2:26 pm on Apr 24, 2008 (gmt 0)

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Just thought I would ask a few questions in regards to a single member LLC. I already did the DBA thing, but from talking with different customers and potential customers (experienced business owners), most recommend that setting up legitimatly will help as far as people wanting to do business with me.

I've familiarized myself with what my state requires, which seems really easy and straight forward, except for a couple of things. I know any replies are just replies and don't replace the advice of a lawyer, but I wanted to ask while I'm learning these documents.

Articles of Organization -

Street Address:

Can this location be a post office box? I know it's probably a silly question, but I just wondered. I prefer business mail to go to a PO Box, and especially anything as important as documents or correspondence in regard to a corporation.


I found another thread that categorized us internet folks under "Software Consultancy" or "internet marketing and development". Thats fine for internet marketing and web dev, but if you happen to do any physical networking (cisco) stuff as well, or happen to actually buy and sell items as a function of one of your websites, do you list multiple purposes?

Operating Agreement for single member LLC -

I found some nice operating agreement templates for single member LLC, but they speak as "if there is more then one member", then these rules will take place. Otherwise...? I've read more than once that for a single member, having an operating agreement is especially important to hold up as an LLC in regards to business intention.

Another area in the operating agreement that seems confusing is "Foreign Qualification". Basically stating that if the business to engage in business out of state, it will qualify as a foreign LLC based on the rules of whatever state it will operate in. <-- To me thats a very important point, since a good portion of internet work could be completed for out of state customers. Does that mean following the states basic rules as a foreign LLC, or actually setting up shop in said state as a foreign LLC before starting work? If it is the later, I couldn't compete legitimately out of state, just in time and fees to be legitimate.

I think the only lesson I'm learning here in regards to setting myself up as legitimate, is that it's easier and probably more profitable to work like the college students doing web pages for occasional cash or the offshore consultant who can get away with crap work and not go through any of this bologna.

2:09 am on Apr 29, 2008 (gmt 0)

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Hi there!

My partners and I actually just mailed our LLC application last week so I just finished a LOT of research!

A lot of your questions will really depend on your individual state's laws. The best thing to do to get accurate answers is to contact your state's secretary of state office, llc is usually handled by the corporation division.

From what I've seen in my own research (we considered NV, SC, NC, OR, and decided on MS)...and as you said, I'm no lawyer and would appreciate any corrections...

Street address: should be a physical address. This address is the one used to serve papers upon an LLC in the case of legal issues (registered agent)

Purpose: Should be a brief overview of your intentions, what you plan to do with this endeavor. Sort of like your mission statement.

Operating Agreement: Depending on your state, you may not be required to have a written operating agreement. Each state has their own default laws regarding termination, adding partners, responsibilities, and operations. Most states allow the LLC operating agreement to over rule those default rulings - most states also say that the agreement doesn't need to be in writing.

In my opinion, you should read over your states laws regarding LLCs and write down anything you would prefer to handle in a different way. Your articles of organization filed with your state's SOS should suffice as evidence of your LLC status - I would think anyway :-)

Foreign LLC - This I'm not too sure on, and would really appreciate correction, but I think that since you will be performing the work in your home, it is considered a business in your state.

We are 4 partners and live up and down the east coast, including Canada. When I explained this to my state's SOS office, I was instructed to file as a domestic LLC.

As for the usefulness of becoming an LLC - it does add a professional look to your business name, but your work quality will be the determining factor of your success.

If your industry is known for copyright troubles or lawsuits, LLC can protect your personal assets in the case of a lawsuit. I'm not sure of other benefits for a sole propreitor? Maybe someone else can provide more info? :-)

Hope that helps some and you may want to call the SOS to doublecheck!