4 Tips for Small Businesses Moving to an LLC
Starting a business requires much more than a great product design or in demand service. Some amount of business knowledge is also required. You will have to make your business professional, at some point. This requires submitting proper filing paperwork and setting up tax documents. If you are ready to take your business to the next level and make it a legitimate and professional business, you will need to complete the following steps.
Create a professional business name
Customers will learn to know and talk about your business by its business name. Be careful about the name that you choose. You want something that is memorable, but not offensive. You also want to choose something that accurately portrays your business. It is also a good idea to look up open business names, before establishing a name. If you begin calling yourself one name and then later find that it is already taken, you are unable to create an LLC in that name. This can be a problem, as customers already know your business by that name. Even if you are not ready to form LLC online, ensure that your business name is open.
Create an LLC
At some point, you will want to create an LLC. Creating an LLC is a relatively simple process. It is not expensive and it does not require a lot of time. In fact, you can create an LLC online, as long as you follow the LLC rules. There are three rules an LLC name needs to follow, including being different from an existing LLC in the same state, must indicate that it is an LLC, and must not include words that are restricted by the state. Creating an LLC tells the states that you are a legitimate business. This can improve your reputation, allow you to open bank accounts in your form LLC business name, and use it as a documented source of income.
Establish who is a part of the LLC
Many businesses include multiple business partners. When you start an LLC, you will want to establish exactly who is a part of your LLC. LLC ownership can be expressed in two ways, by percentage or membership units, which are similar to shares of stock in a corporation. It is important to carefully evaluate your business partners at this point. Do not give away too much of the business, as it could affect your decision making. Additionally, you will want to leave enough of the business open in the event you should later want to sell membership units. Anyone who is established as part of the LLC at this point will be financially tied to the business.
Understand state specific filings
The specific process to stat LLC online will entirely depend on the state that your business is located in. For example, three states, including New York, Arizona, and Nebraska require that the formation of an LLC be announced in a newspaper. This is called a publication. If you were to live in one of the states and not announce with a publication, your business could lose its LLC status. Ensure that you are following all LLC filing requirements, as set by your businesses home state. If you are unsure about these specific regulations, it can be helpful to work with a filing company.
Every year, hundreds of thousands of businesses are created. Yet, many of these businesses are not legal. This means that they are not registered with the state, do not hold tax identification numbers, and have little in terms of business requirements. At some point, it is important to take your business to the next level and turn it into a professionally recognized business. You can do this by registering an LLC with the state of your business. The specific steps will be set by your state, but are often simple and fast. Many states even allow you to start LLC online. Filing an LLC will require you to choose a business name and establish those who are a part of the business. Creating an LLC for your business can open up many doors to business success.