Starting your own limited liability company is an excellent way to gain limited liability protection without certain disadvantages.
After making sure you are eligible for this type of business structure in your state, the first step is gathering all the necessary information. Not only will this protect you from liabilities, but it will also help you make important decisions along the way.
The following are some questions you'll want to ask when forming your LLC:
How Do I Start Forming an LLC?
The process of forming an LLC is relatively straightforward.
The first step is checking your state's requirements, as the specific steps will vary depending on your location.
Generally, you'll need to file articles of organization with your state's secretary of state or other agency tasked with overseeing businesses and create bylaws and an operating agreement, both of which outline the rules and procedures for your LLC.
How Do I Name My LLC Business?
The name of your LLC is an important consideration. Your business name should be unique and not infringe on any other businesses' trademarks. It's also important to make sure the name is easy to remember and spell out what your company does.
Do I Have Investors?
If you're a sole proprietorship or a partnership, then the answer is generally no. Investors are only interested in working with businesses with an LLC or a corporate structure. This is because those business entities offer more legal protection for the investors.
Now, if you have an LLC, it is mostly up to you whether or not you want to have some investors, but that would add a lot more complexity to your business because investors expect a return most of the time. Creating an LLC with your own money can make things a lot easier.
Do I Need an Attorney to Form an LLC?
While not all states require you to have an attorney, it is a good idea to have one.
An attorney can help you make sure you're doing everything correctly and give you legal advice. Attorneys also know the ins and outs of state law and help you navigate any complicated paperwork. If you're unsure where to start, consult with a local law firm. They'll be able to help you get started on the right track.
When it comes to self-employment taxes, an attorney can also be helpful. As the business owner, you pay employment taxes on your net income.
Do I Need an Accountant or Tax Lawyer?
An accountant keeps track of your company's financial records and prepares the internal revenue service (IRS) report each year.
They also help with filing the annual franchise tax in most states. A tax lawyer enables you to file the IRS report each year, but they also help with the owners' personal tax returns. This is why it is essential to find an accountant who can do both jobs for you, so that way, one person doesn't have to keep track of two sets of records.
Deciding whether you need an accountant or a tax lawyer may depend on you and the size of your business.
What Is a Registered Agent?
A registered agent is a third-party individual or business entity that acts as the official contact for a company or organization in the state where it is registered.
The registered agent's responsibilities include accepting legal notices and processes served on the company and forwarding any relevant documents to the appropriate individuals within the company.
What Is the Federal Employer Identification Number?
The federal employer identification number (FEIN) is a unique nine-digit number assigned to businesses and organizations by the Internal Revenue Service (IRS). The FEIN is used to identify taxpayers for tax purposes, and it must be included in all tax forms and correspondence.
Generally, the FEIN is also used to report employment taxes and obtain government services.
What are the benefits of forming an LLC?
There are several benefits to forming an LLC. First and foremost, your business will be protected from certain liabilities.
For example, if someone sues your business and wins, their only legal recourse is to go after the company's assets.
How Many Members Can Llcs Have?
Most states allow LLCs to have an unlimited number of members, but a few states limit the number of members.
For example, California LLCs can only have up to 100 members, and Texas LLCs can only have 75 members.
If you're unsure about the maximum number of members for your state, contact your state's business services office.
What Is an LLC Operating Agreement?
An LLC operating agreement is a document that governs the internal affairs of an LLC. This includes how each member's ownership interest in the business is determined, how they make decisions on major company issues and other rules for doing business as an LLC.
Is Forming an LLC Worth It?
The short answer is, it depends. There are several factors to consider when deciding whether or not to form an LLC, including the state you live in, the size of your business, and your specific needs.
Do LLCs Really Protect You?
Although LLCs provide some degree of personal liability protection, you should not rely on them as a replacement for other forms of business insurance. LLC members may still be held personally liable in some situations.