Are you considering venturing out on your own and creating your own company? You must choose the appropriate legal structure for your business if this is the case. It’s possible that forming a limited liability company is the best choice for you, particularly if you want some additional protection against personal liability. When confronted with the option of what kind of legal structure your company will have, starting a business may be an exciting activity, but it can also be a little scary. It is simple to get overwhelmed by the sheer number of available choices; hence, it is beneficial to acquire an understanding of the essential possibilities and the benefits and drawbacks associated with each. Your first step should be to discuss this significant choice with a legal professional, but in the meanwhile, the following information should help get you started.
Choose the Right Name For Your LLC
There are many choices to be made when starting a business, including what to call the company, where to locate offices, and what marketing strategy to use. These choices may be disastrous if you don’t know what you’re doing. However, if you have formed a limited liability company, you may be in luck since this kind of corporate entity is not only a sensible approach to shield your assets from business losses, but it is also quite simple to establish and manage. One decision you’ll need to make before forming your LLC is what to call it. If your company sells wares under a specific name, having that name as the LLC’s title will make things easier for people seeking your product or service. You should choose a more general name if your organization uses numerous names.
File Articles of Organization with Your State’s Secretary Of State
The Secretary of State in the state where your firm will be based must receive the articles of incorporation. Find out what forms and costs are needed in your state by visiting the Secretary of State’s website or consulting a local attorney. While state regulations do differ, very little documentation is needed. Apply for an EIN with the Internal Revenue Service as well. Obtain a taxpayer identification number from the Internal Revenue Service, then file a self-employment tax form with the Department of Revenue in your state.
Your first order of business should be to register with the Internal Revenue Service for a unique employment identification number (EIN) and sales tax, if applicable. Moreover, when filing your federal and state income tax returns annually, you must include a separate line itemizing your company income (using Schedule C or Schedule F, respectively) to avoid penalties. This will safeguard your assets in the event of business claims or lawsuits.
Draft a Set of Operating Rules for Your Limited Liability Company
A limited liability company (LLC) is a business entity that combines a corporation’s liability protection and tax benefits with the operational freedom of a partnership or sole proprietorship. The first thing you should do if you want to form a limited liability business is write up some operating guidelines. Though not mandated by law in every jurisdiction, having a set of operating standards in place may assist in clarifying how your business operates internally and head off any conflicts.
Operating rules are principles by which you want your company to function. It might be more broad, such as who gets to make choices and under what circumstances, or it could be more precise, such as how much time each member should spend on day-to-day responsibilities like marketing or accounting. Keep in mind that you have the freedom to establish your standards. However, following the norms typical for LLCs in your state will likely be more convenient.
Make Sure You Keep Track Of All Important Business Paperwork and Filings
One of the first things to do if you want to form your LLC is to establish a reliable filing system. Make sure you have all your legal papers, such as tax returns, contracts, and wills, in one location. Having a structure for filing receipts will make it much simpler to track relevant documents when tax time rolls around. Make sure you know how you’ll be taxed and what paperwork you’ll need to complete before you launch your firm. If you don’t get the data up front, you’ll waste more time and money in the long run.
If you’re ready for your business to grow but want to avoid the paperwork and hassles of a full-fledged corporation, then a Limited Liability Corporation (LLC) may be just what you need. LLCs offer all of the advantages of a corporation in terms of liability protection while requiring much less work than an S or C corporation. While filing paperwork is never fun, the Corporation Center can assist with your LLC formation at (800) 580-4870.