Are you interested in starting your own business? If so, then an LLC might be the right choice for you. But first, you’ll want to know what starting an LLC involves.
The more informed you are, the better able you’ll be to determine if it’s the right move for you. Read on to find out 5 things you should know before starting an LLC!
1. You’ll Need to Assemble the Right Documents
Any time you start a new endeavor, it’s going to come with some paperwork. Starting an LLC is no different. But if you understand your organization’s goals and approach the process with a clear business plan, you should be able to move through the paperwork efficiently.
When you’re considering how and where to start an LLC, you’ll need to put the secretary of state’s office at the top of your list. Your secretary of state’s office will be the main site where you’ll file the required paperwork. And they should be able to answer any questions that you have.
To fill out this paperwork, you’ll need to know who the main person in your organization is who will handle money. You’ll also need to know your organization’s purpose and map out the responsibilities within your management system.
Additionally, you’ll need to get an employee identification number, known as an EIN. This is something you’ll do separately through the IRS. And while you’re at it, you’ll need to use your EIN to establish a bank account.
2. Starting an LLC is a Good Move for the Future
What is an LLC? It’s a structure used to start a business that is particularly popular with entrepreneurs. An LLC offers a level of protection from lawsuits, but more importantly, it also offers a good opportunity to grow your business.
Especially if you’re just starting out, going with an LLC is a good choice for future expansion. You’ll create a sense of structure without creating too many restrictions. Plus having LLC by your name lends a sense of credibility to your business.
Anytime you file a document, create a business card, or share your business information with another person, they’ll see the LLC designation after your business’s name. And this will communicate that you’re working to build a professional organization.
3. You Can Manage Your Business the Way You Want
Planning where to start an LLC is just one step toward getting your business off the ground. And the good news is that having an LLC enables you to do what you want with the business!
With LLC formation, you’ll have the flexibility to manage your business the way you want to do it. There are no rules governing how you set up management, or how many people are in charge of the organization. You can be the lone person in charge of everything, or you could have hundreds of people working at your organization.
Flexibility is one of the main perks of starting an LLC. While you may run into challenges finding investors as an LLC, ultimately the ability to be in control is a huge advantage.
4. Be Clear on How Taxes Work with an LLC
When you decide to start an LLC, it’s important to be clear about how taxes apply to you. Venturing into a new business can feel overwhelming with so many ein number to keep track of — and taxes can be a source of frustration if you don’t know what you’re doing.
It’s critical to know that you’ll be considered the same as a sole proprietorship when you are an LLC. And this means you’ll be paying taxes as such — unless you choose another option. Although there are many benefits to starting an LLC, the tax issue can be one of the trickier ones to navigate.
Starting an LLC won’t necessarily be a way to save on taxes if you’re taxed as a sole proprietorship. There are multiple options as to how to be taxed with an LLC, however, so you’ll want to pick the right one. To avoid paying more than you should be on taxes with an LLC, consult with a financial professional for the best advice.
5. Know the Financial Implications of Your Decision
Entering into a new business situation means that there will be some expenses — and some of them might catch you off guard. Before you get your papers in order to start an LLC, be aware that you’ll have to make some initial payments as well as some annual ones.
There may be fees assessed to you when you file an LLC. This can be a few hundred dollars or more depending on where you live. Additionally, you may wish to hire an attorney to make the process easier — and this will cost money, too.
If finances aren’t in your comfort zone, you may need to pay for the assistance of a CPA or other financial expert to guide you through the tax process. While this will cost money, it may help you save on taxes and maximize your profits. In other words, it might be worth the expense.
When you’re feeling confused or stressed, it’s important to remember that starting an LLC is a simpler and less expensive option than starting a corporation.
Understand How to Start an LLC
Starting an LLC can be an excellent way to set your business on the path to success. You’ll gain the right amount of flexibility to grow and adjust your management structure and style as you see fit. And best of all, you’ll have protections in place to keep your business safe.
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