Launching a successful startup requires a solid idea, a good plan, and most importantly – a defined business structure. There are several options on the table, including forming a corporation. However, most startups choose LLC or limited liability company as their option of choice. Here’s all you need to know about becoming an LLC as a startup.
LLC has become one of the most popular forms of business organization. The reasons for this are numerous, all of which work in favor of you as the founder. For one, opening an LLC removes personal liability from your business, hence the name. Being protected from limitless personal liability has proven to be a massive stimulant for most businesses.
Furthermore, almost every state in the United States offers attractive tax benefits to LLC formed by single or multiple owners. These two benefits are just the peak of the iceberg when it comes to LLC and their advantages over a sole proprietorship.
Chose a Business Name
The decision to set up an LLC is the first step. The next most important step is choosing your business name. Choosing the right name is both a creative and administrative task. Once you’ve come up with the right name, you’ll need to make sure that it’s unique to your state.
The best way to check this is to run a search in your Secretary of State’s business database. Additionally, you’ll need to ensure that your chosen name isn’t copyrighted on both state and federal level.
Setting Up an LLC is Easy
Most new business owners are put off by the idea of starting an LLC thinking that it’s extremely complicated. In reality, once you select a name, there are only 4 more things you need to do:
- Choose a Registered Agent – A registered agent, or statutory agent, is an individual who will handle your LLC’s official affairs. In other words, this is the person authorized to send/receive official documents.
- File Articles of Organization – Next, you’ll need to file the articles of organization. This is a set of paperwork that defines important information such as the address of the LLC, its name, the name and address of the registered agent. Articles of Organization also define the purpose for which the LLC was founded.
- Get Your State Certificate – Once you’ve met all the previously mentioned requirements, you’ll need to get a state-issued certificate that officiates the existence of your LLC.
Get Your Federal Tax ID
With the state certificate in hand, your company can now be issued a federal tax ID and is officially ready to commence business. You’ll need the tax ID for several important reasons, beginning with opening a bank account to doing business with vendors as some of them require the tax ID number.
LLC Makes Sense
Starting an LLC is a simple and effective way of getting your startup off the ground. This form of business organization offers the most range and the best tax benefits compared to every other model out there. The process of forming an LLC differs from state to state. Make sure to check your state’s conditions and requirements.