How to Start an LLC

Disclosure: This post may contain affiliate links, sometimes banners, which means that if you click on the link and purchase the product, I will receive an affiliate commission at no extra cost to you. I would not recommend something that I do not think is an excellent tool to help you grow your business. This is not legal advice—for that type of stuff, you should consult a professional within the relevant field.

Forming an LLC has various advantages, including full control over management. This gives you the freedom to operate your business as you wish without outside interference.

LLCs have pass-through taxation, meaning they do not have to pay corporate income taxes. This is a significant perk because LLCs usually have lower tax rates than other business structures.

Some states have tax deductions on the filing fee (paid to the state government). For example, Arizona provides a $600 filing fee deduction for LLCs. This makes forming an LLC a very cost-effective option. The best part is that there are no restrictions on where to start an LLC – as long as it’s in one of the US states, you’re good to go!

What is an LLC?

An LLC business structure offers limited liability protection and pass-through taxation. Members (the owners of an LLC are called) are shielded from personal liability for acts of the LLC and its other members. As a result, creditors cannot pursue the owners’ personal assets (house, savings accounts, etc.) to pay business debts. On the other hand, the personal assets of sole proprietors and general partners can be pursued against the business’ debts.

LLCs typically do not pay taxes at the business entity level. Instead, any business income or loss is “passed through” to owners and reported on their personal income tax returns. Any tax due is paid at the individual level. Corporations that cannot or choose not to be taxed as an S corporation (these are known as C corporations because they are taxed under Subchapter C of the Internal Revenue Code) are taxed at the business entity level. Their shareholders are taxed on the income distributed to them.

Wolters Kluer

The advantages of forming an LLC include:

• Limited liability protection for members.
• Pass-through taxation means that any business income or loss is “passed through” to owners and reported on their individual income tax returns.
• Lack of need for shareholder meetings.
• The ability to operate as a stand-alone business or join other LLCs to form a consortium.

The Benefits of an LLC

LLCs offer business owners the same liability protection as a corporation. This means that LLCs are protected from personal liability for their members, officers, and directors. Additionally, LLCs are taxed as pass-through entities, meaning profits are reported on the owner’s personal taxes rather than corporate taxes.

LLCs reduce regulations commonly found with other business entities. For example, an LLC can be formed without obtaining a state license or filing any paperwork with the government, reducing the time and cost associated with starting and running a business.

Passing profits to the owner’s personal taxes reduces complexity and avoids double taxation. This is because profits are taxed once at the owner’s level rather than twice – once when earned and again when they’re distributed to shareholders of an LLC.

The formation process for an LLC is straightforward. There is no need to have the complex legal or financial knowledge to form an LLC. The process can be completed in just a few easy steps online or over the phone. Managing an LLC is also easy—all you need to do is adhere to simple rules and regulations set by state law. Finally, being an LLC offers many benefits, such as increased flexibility, risk reduction, and profitability.

---

---

How to Form an LLC

The Steps to Forming an LLC

To form an LLC, complete paperwork and file documents with the state. Other business options include corporations, partnerships, and sole proprietorships. The filing process varies by business type.

Creating an LLC operating agreement is essential before filing your LLC documents with the state. This document will outline the structure of your LLC and set forth the rules governing its operation. You should also file annual reports with your state when required by law. Doing so will keep your information up-to-date and help protect your business from lawsuits. Finally, do business in other states as permitted by law. By doing so, you can take advantage of the benefits of operating a limited liability company in multiple states.

*If you click on one of these links and make a purchase, I may make a small commission. It won’t cost you extra.

How to Name Your LLC

To start an LLC, you’ll need to pick a name that is distinctive and will avoid any legal trouble. In most states, you’ll need to add “LLC” or “Limited Company” to the end of your business’s name. You can search and choose your business name in all 50 states using LLC.com.

It would be best if you kept a few things in mind when choosing a business name: it should be easy to remember, not confusing or misleading, and it should not infringe on any other company’s trademarks or copyrights.

Once you have selected a name, make sure to file articles of organization with the state where your business is located. This will formalize your business and allow you to start taking advantage of some significant tax breaks.

How to Choose a Registered Agent for Your LLC

Selecting a registered agent for your LLC can be confusing. With a variety of services and costs offered by most agents, it becomes challenging to determine the best fit for your needs.

State residency: Almost every state allows anyone who is a state resident over age 18 to serve as a registered agent.

-Which services the registered agent offers: Registered agents usually offer different services, such as receiving legal documents on your company’s behalf, preparing and filing taxes, or providing marketing and branding support. The cost of these services depends on which state you are forming your LLC in and, moreover, which registered agent service you are hiring.

-Agency fees: Many states require their LLCs to name a registered agent (also sometimes called a statutory agent). This means that the agency fees charged by the registered agent must be considered. Agency fees are due annually. Incfile provides this service. You can choose from 3 packages to start your LLC. The most popular are their gold and silver plans. Both plans come with a free registered agent for the first year!

How to Get an EIN for Your LLC

You can skip this step by signing up through Incfile’s gold and silver plans. Otherwise, if you want to form an LLC, you must apply for an EIN online or by mail. There is no fee to get an EIN through the IRS. You can get your EIN by filling up the form and submitting it to IRS. Before applying for the EIN, check if you need an EIN. You can also check if you are eligible for an EIN by visiting the IRS website.

Here’s a video on how to start an LLC

---

Incifile can also help you set up an S-Corp, nonprofit and more. They have a great resource section. Check it out.