What’s the difference between an LLC and LLP?
Dear Dave: I’m thinking about forming a Limited Liability Corp. What’s the difference between an LLC and a Limited Liability Partnership. Which one do you recommend? — Susan
Dear Susan: Essentially, they’re the same thing. An LLC with more than one shareholder functions just like a partnership.
I wouldn’t recommend either one. I’d go with a Sub-S Corp. unless you’re planning to own a lot of real estate. You don’t need LLC or LLP status unless you’re making serious money or have personal assets to protect.
And Susan, I’d stay away from any situation where you have a bunch of partners. Lots of times when the business crashes the friendship crashes, too. You don’t need that kind of stress in your life. — Dave
Dear Dave: We’re trying to get our debts paid off, including a couple of credit cards that we’re behind on payments. The credit card company is being really nasty even though we’re trying to work with them. The same man calls us at work even when we’ve repeatedly told him not to do this. Today he called me five times within a 10-minute period. How can we get this to stop? — Tanya
Dear Tanya: You owe the money and need to pay your debt. But these bozos are breaking the law, and it’s going to take a real slap in the face to get their attention.
Send a letter overnight delivery to the guy who has been calling and the company headquarters telling them that your financial counselor informed you they are breaking federal law. Make sure you get proof of delivery with a tracking number from FedEx or UPS.
According to the Federal Fair Debt Collections Act, once a creditor has been notified not to call a person’s place of employment he is required never to do so again. If you want to have some real fun, invite him to call back one more time because you would love to sue for $10 million and win!
Make sure you keep copies of the letter, because you’ll need proof he’s been notified in the event this goes to court. Also contact the Federal Trade Commission and report these guys immediately.
Remember, Tanya. You owe what you owe. But you need to get these guys off your back and under control! — Dave
Mutual fund for furniture?
Dear Dave: We moved into a new house a few weeks ago, and I was wondering if it’s okay to cash out a mutual fund to buy some furniture. We’ve got about $2,500 in the fund, and it’s not for retirement. We’re debt-free except for the house, and have a fully funded emergency fund in place along with our Roth IRA and 401(k). — Laurie
Dear Laurie: You’ve done a fabulous job with your money, so reward yourself and get some new furniture! Just cash out the mutual fund and tell them to send you a check.
Keep on being very smart with your money, and see if you can buy this furniture at a wholesale outlet. Even the greatest deal at a retail furniture store is expensive, so check out wholesalers or even places that are going out of business.
You’ve worked hard to get where you are, Laurie. I’m very proud of you! — Dave
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