Your First Steps

As an entrepreneur you will inevitably deal with all kinds of issues you must resolve. The one which is most important to your business' survival is dealing with the red table mandated by our government. In the United States a business must be registered with the state (i.e., California, Tennessee, Alaska, etc.) and the federal government's Internal Revenue Service (the IRS). This is technically the first step to starting your business after you have a solid business plan. For more on making a business plan click here (coming soon).

The State and LLCs

A business can be in different forms such as a corporation or a Limited Liability Company (LLC). For the purposes of this article, we shall discuss LLCs. An LLC is a business structure that protects your assets in case you are sued. So, if you lose the law suit your personal assets are not affected.

In an LLC you can have multiple businesses or just one. For example, you can start an LLC called "Jefferson Enterprises, LLC" and operate a restaurant, a gym, and a laundromat with their own 'Doing Business As' (DBA) names (ex. Jefferson Gym, Jefferson's Grill, Jeff's Laundry). The owner of an LLC is called a member. An LLC can have multiple owners (called a Multiple-Member LLC).

To create an LLC, you must file a form called the Articles of Organization with the Secretary of your state's office, a similar agency or an agent whom you can contract to do the work for you. There is a one-time filing fee, each state has a specific cost and annual fees. Annual reports are also necessary for most states.

It's important to understand that an LLC is a separate entity from yourself. You are not an LLC, you form, own and manage an LLC. An LLC is not a corporation. LLCs do not have to have a board of directors, corporations do. LLCs do not have to hold board meetings, corporations do. LLCs can distribute profits however they wish, corporations cannot. To summarize this point, LLCs are the most popular and flexible business entity for business owners.

Creating an LLC

To start, just create a name for your LLC. Your LLC should end with the letters LLC (ex. Jefferson Enterprises LLC). You must prepare the form called Articles of Organization, Certificate of Organization, or Certificate of Formation. Each state has a different name for this form, but the concept is the same and the forms are mostly similar.

After you complete your LLC form you must file it with your Secretary of State's office. You may mail in your form or file online. Filing online is definitely the fastest way. Along with the form you must pay a fee. (To see your state's filing fee, read our article on that subject here) Depending on how you filed your paperwork you should receive a notice from your Secretary of State office saying you were approved.

What's next?

Next you must create an Employer Identification Number with the Federal government's IRS. Read our next post for information on that!

Want To Save Time?

We offer a full business registration service for only $5 + state fee. We would have your LLC and IRS form filed within 48 hours of your payment. Guaranteed satisfaction and 100% support the whole way and we will also file your biannual reports free of charge! Click here to start your business by contacting me. We can do it live so you can watch the process done in real time! This offer will not last long, contact us today!

But you need to know more? Get The Taxpayer's Comprehensive Guide to LLCs and S Corps here. Everything you need to know about LLCs is available from our partners at WCG, INC accountants and business advisers.