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LLC and Sales Commissions?
Posted on 8/24/19 at 4:22 pm
Posted on 8/24/19 at 4:22 pm
Backstory: So The other week I did a friend a favor and sketched up some agricultural field processing equipment to try and save her some $. I setup procurement and fabrication via a contact who specializes in the area and will arrange to have her buy direct so I don’t have to get insurance since it was “just 2 units”.
Now I got a call saying - “I have 2 groups wanting to order 6-10 more units. Can you setup an LLC and insurance to do this together? “
I can setup an LLC, but I’d prefer to fabricate and sell on my own and just pay my friend a large commission as a sales agent.
Can I setup a sole proprietorship LLC and operate this way? Or will paying a sales commission trigger something where the salesman might be considered as employees?
I really don’t want employees and really need the insurance and LLC in place since it’s moving stuff that can maim a person if they operate incorrectly.
Now I got a call saying - “I have 2 groups wanting to order 6-10 more units. Can you setup an LLC and insurance to do this together? “
I can setup an LLC, but I’d prefer to fabricate and sell on my own and just pay my friend a large commission as a sales agent.
Can I setup a sole proprietorship LLC and operate this way? Or will paying a sales commission trigger something where the salesman might be considered as employees?
I really don’t want employees and really need the insurance and LLC in place since it’s moving stuff that can maim a person if they operate incorrectly.
3
Posted on 8/25/19 at 9:11 am to eng08
Yes, just do a single member LLC and then 1099 the salesperson. You will write the sales commission off as a business expense.
Get your insurance and you are good to go.
Get your insurance and you are good to go.
Posted on 8/25/19 at 11:04 am to AugustaTiger
quote:
Yes, just do a single member LLC and then 1099 the salesperson. You will write the sales commission off as a business expense. Get your insurance and you are good to go.
Since you are concerned about liability a single member LLC is civil liability suits are frequently treat as an individual (you). I was ask a lawyer who is familiar with this.
Posted on 8/25/19 at 12:06 pm to eng08
Any net income generated by you or the LLC and distributed to you will be subject to self employment taxes. Single member LLC is the same as being a sole proprietorship unless you choose a different tax classification. Single member LLC gives you zero asset protection. You'd be better off just operating as a sole proprietorship for now
This post was edited on 8/25/19 at 12:08 pm
Posted on 8/26/19 at 11:04 am to cajuncarguy
quote:
Since you are concerned about liability a single member LLC is civil liability suits are frequently treat as an individual (you). I was ask a lawyer who is familiar with this.
In Louisiana, provided you respect the LLC (keep your filings up to date with the state, have occupational license, have and use business bank account, promote yourself in your business name, etc) you get a decent amount of protection.
Now, I would also recommend a strong liability policy.
Posted on 8/26/19 at 11:22 am to LSUFanHouston
Thanks, for an email to my ins guy.
What occupational licenses you need for equipment sales? I didn’t think I needed any?
What occupational licenses you need for equipment sales? I didn’t think I needed any?
Posted on 8/26/19 at 12:00 pm to eng08
quote:
So The other week I did a friend a favor and sketched up some agricultural field processing equipment to try and save her some $. I setup procurement and fabrication via a contact who specializes in the area and will arrange to have her buy direct so I don’t have to get insurance since it was “just 2 units”.
I'd get with a lawyer. Are you giving technical or engineering help? In a professional manner? Or just basic like design drawing?
I am NOT a lawyer, but unless you are giving some expert opinion I would think most of the liability would fall onto the fabricator and person that actually sells the equipment. Your real only liability is for the help you provided.
As said you also want to figure out what all a LLC will do for you, as often times a single member does not provide much protection. You may be better off just buying extra liability insurance.
Posted on 8/26/19 at 12:45 pm to baldona
I’m not doing engineering for this and am comfortable in that realm since it’s my day job. The fabricator is performing the review on the sketches.
This post was edited on 8/26/19 at 12:46 pm
Posted on 8/26/19 at 2:28 pm to eng08
quote:
What occupational licenses you need for equipment sales? I didn’t think I needed any?
If you are in LA, you will need one from your local parish. It's a fee based on revenue.
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