In these uncertain times, it takes a lot of courage to sail into entrepreneurial waters. The statistics are not popular and most often don’t speak in favor of new companies. Still, that shouldn’t discourage you. Starting your own business is a brave decision. And if you play it right, it will turn out to be a very profitable venture.
Future entrepreneurs are often overwhelmed by conflicting information from different sides. That can create confusion and distract them from the idea of starting their own business. Yet, the whole procedure doesn’t have to be complicated if you know what you want and how to get there before you start. As seen here, there are many forms of businesses you can run. LLC or Limited Liability Company is just one of them.
In Short about LLC
This business structure is a tax-exempt entity separate from its owners and their personal properties. Although a hybrid form, experts agree that LLC represents the best of both worlds – corporations and partnerships.
It’s marked by low risk, operation flexibility, and tax simplicity. This form can be started by an individual or several business partners who will be formally referred to as members. The number of owners and managers is quite flexible, and these can be both individuals and companies.
Most small and mid-sized business owners are happy to decide to form LLCs, independently or with partners. These startups are easier to establish and manage than a corporation. And the ease of separating private and business property is what makes this structure popular.
The superficial reason why this form has become so popular is that companies act more professionally when they have the abbreviation LLC along with the name. It means that both clients and associates will take them seriously. In the long run, that can be a significant added benefit to the success of your business.
Real Advantages of Forming Limited Liability Company
By owning an LLC, you are clearly separating from your company. It means that your personal property is safe in the event of financial crashes and debts. You are only liable for assets that belong to your business. Also, if a client or partner is suing you, the lawsuit is against your company, not you (which is not the case with sole proprietorships).
A simpler management procedure is what sets an LLC apart from a corporation. It doesn’t take too much paperwork to start your own company, nor too high a cost. Less paperwork means fewer business commitments, such as annual meetings, shareholder meetings, filing annual reports, etc.
Still, just because keeping extensive records is not binding on LLCs doesn’t mean you can’t do it. Simply, if it will give you peace of mind, you can do book checks whenever you want.
Informal managing structure is another benefit of forming an LLC. When it’s not fixed (as with corporation), there is freedom of taking business action. That can have both good and bad sides, so it is necessary to urn everything agreed into a written contract between members. They will perform the division of managerial functions in the way that will most benefit their company.
Starting LLC
Before starting the paperwork, think about the name of your company. When you come up with something catchy and memorable, like Etison LLC, start thinking about how you will appear in the market. These are logical steps, provided you have researched the market and competition.
An individual needs to register your startup with the IRS. This process takes only a few minutes. Things can get a bit complex when it’s about companies forming this business structure, but it’s still not rocket science. To speed up the process, one can opt to register a startup with a professional online business filing service. It provides you with ready-made business forms, instructions, and tutorial guides.
In order to start an LLC, you must pay a filing fee. You must also pay this fee for your business accountant. Then, you have to get your license from the government. Your accountant will help you with this part. After paying all the initial expenses, you can submit your application to the IRS.
Next, an LLC must establish its organizational standing, i.e., you need a certificate of formation. All states permit the operation of limited liability companies, and many allow its taxation. But each state has special forming conditions, so it is necessary to inquire about them well before this venture.
Along with this step, look for a licensed agent. Their tasks will be to represent your company in the event of a lawsuit. In simple words, they have to accept and handle the legal paperwork. Of course, they do that as a legal entity, and that has nothing to do with private lawsuits.
Operating Agreement
The other important things to know about starting LLCs are their operation and the creation of LLC operating agreements. This document outlines the responsibilities of the LLC owners as well as the duties of the management.
This paper is not mandatory, but it facilitates the business of an LLC. It is something like an internal agreement between members on the division of responsibilities. If you do not make an operating agreement, the state takes the responsibility to govern your company.
Tax Issues
The final step is to register your LLC under the appropriate tax classification. And the best part is that you can choose how to be taxed, whether as a sole proprietor, partnership, S or C corporations. It will depend on whether your company has one or more owners. These treatments can have huge advantages for startups.
On the following source, you can check detailed tax requirements for an LLC:
https://howtostartanllc.com/taxes/llc-taxes
Complicated administration can often be an insurmountable obstacle, but it is necessary. If you want to lay a good foundation for your business, you need to be familiar with the laws and procedures. So if you arm yourself with knowledge and have a huge motivation to succeed, starting LLC will be a piece of cake.