As a potential entrepreneur, you should know the best, easiest, and most affordable way to start an LLC. Before we jump to the how – you might want to know what LLCs are and how they can benefit you as a potential business owner.
What is an LLC – An Overview
Basically, LLC stands for “limited liability company,” which is ideal for business startups. This business structure is perfect for those who take their business seriously. Having an LLC will limit your personal liability. This aspect indicates that when and if your business gets sued, no one can come after your personal assets.
In case your business gets sued, they can only come after your business assets. If you have a lot of personal assets, then you can immensely benefit from an LLC. Even if you have a business that has the least chance of getting sued, it is still in your best interest to get an LLC so that you have that safeguard right.
Another great benefit of having an LLC is that it can make it possible to attract outside investors to your company. Of course, as a business owner, you will also have to look into taxes, which is also where you can immensely benefit from an LLC; as with LLCs, tax is only applicable once to the business owner’s income.
In the case of traditional corporations, income is taxed twice—once in the corporation itself and another time when you pay yourself. On the other hand, if you have an LLC, you are only taxed once, which is mainly because an LLC is a pass-through entity.
So, whatever income you are going to make in your LLC will go directly to your own personal tax return. To learn more about taxes, you will want to hire a professional accountant to help you with business tax preparation, as they know exactly what to do and what the best tax strategy is for your business.
How to Set Up an LLC?
When it comes to setting up an LLC, it starts with choosing a name for your LLC. Now, this step is very straightforward, as you might already have a name for your business. However, if you don’t have a name for your business, then you should generate one that suits you and your company.
Some states require you to end your LLC’s name with an LLC designator, such as Laura’s Bakery LLC. When selecting the name of your LLC, you must also ensure that there are no other exact same names as your LLC; otherwise, your LLC name will most likely be rejected.
You will also need to hire or assign a registered agent as the registered agent is the person who agrees to accept legal paperwork on behalf of the LLC, including lawsuit documents or any other legal documents.
The registered agents are required to have a real street address in the respective state where the LLC is registered. If one of the members of your company wants to be the registered agent and has a real address in the respective state where the LLC is registered in, it will work too.
