Starting a small business in the United States can seem like a pretty daunting task. Whether you have a really great idea or you just want to do what you do best, there are a lot of questions that need to be answered and a lot of paperwork that needs to be filed. Naturally, you’ll have a lot of questions at each step of the process and often times the answers won’t be obvious. The truth is that a lot of owning and operating a business comes down to making choices that seem to fit your leadership style. That being said, a little help along the way is always nice and good advice is worth a lot more than it usually costs. This article is primarily focused on creation of LLC in US.
A First Choice
One of the first steps in this journey will be deciding what type of organizational structure you want your business to have. Are you starting a Partnership, a Cooperative, maybe a C or S Corporation? Maybe you want a Sole Proprietorship?
The choice you make here, this early on in the game, is going to have a major impact on everything your business does later on. While there are a lot of great reasons to pick any of the aforementioned business structures, the type of business you may want to consider first above all is an Limited Liability Company.
What is an LLC?
A Limited Liability Company, or LLC, is one of the most efficient and flexible types of business around for operation both inside and outside the United States. It is a hybrid between a partnership and a corporation, joining some of the attractive benefits of both into one business.
With an LLC, you can enjoy the tax benefits and operational flexibility of a partnership and the limited liability of a corporation. This versatility is one of the many reasons why LLCs have become so popular.
How it works?
Each ‘owner’ of an LLC is called a “member”. Depending on which state you’re operating in, a member could be anything from one person to a different LLC. While shareholders in a corporation would be taxed as separate business entities, members of an LLC will be taxed in a fashion more similar to a partnership.
The profits (and losses) of the LLC will be passed through the company and directly onto the members, where they will be reported on each member’s personal federal tax return. It may not sound very different to the structures you’re used to, but these subtle differences can make a tremendous difference in the organizational operations of your company (and in the profit margins!)
As with starting any type business, it can be a complicated process. Luckily, forming an LLC has never been easier thanks to companies like Corporation USA that will do most of the dirty work for you. This means less ‘sweating the little stuff’ and more ‘making the big decisions’ for you! And speaking of big decisions, it’s time to think about the first steps to turning your big idea into a life-changing reality.
Selecting your state
If you’re starting a small business, it’s likely that you want to operate in the state you live in. However, it is important to consider what it is you want to do and how well it will work in your home state. The laws binding business structures like LLCs can vary greatly from state to state.
It’s vital that you research the specific LLC laws in your state to make sure you’ll be able to make your dream fly. In some cases, you may decide to operate in an adjacent state or even move to a different state. Depending on your industry, you could even open an LLC in a state you’ve never visited before. If your business is successful, you can always expand or move into your home state.
Whichever state you choose, familiarize yourself with any laws that stand out as potential boosts or hindrances to your business. Knowledge is power, so stay well-equipped..
Naming your Limited Liability Company
Now that you’ve decided which state you want to form your LLC in, it’s time to pick a name. Not only does this give a face to your vision, but it is a necessary early step to starting your company. In order to begin creating an LLC, your name must be accepted in your state. When choosing a name, there are a few things to keep in mind:
- Familiarize yourself with your state’s laws regarding LLC names. You want every good name you think of to be usable.
- Pick a distinctive name, something that stands out. You want your business to be noticed. Also, you want to distinguish yourself from your competitors.
- Make your name memorable. When people hear the name of your business, you don’t want them to forget it.
- Don’t make it too complicated; make it simple to read and easy to understand. You want people to have no trouble reading or spelling it.
- Your name should suggest something about your business. When the name comes to mind, it should give a subtle reminder about your profession.
Once you’ve chosen a name for your LLC, it’s time to check that the name is available in your state. Using a name that has already been taken is prohibited. You can reference any number of free online searches by state, to figure out which names are already taken.
Once you’ve picked out the right name for your LLC and checked that it is available in your state, you are ready to move on to the more complicated stuff: the dreaded paperwork. This will include officially picking your registered process agent, filing your Articles of Formation and Organization (and sending them to the Secretary of State in your state), preparing and officially executing your operating agreement, obtaining an Employee Identification Number (EIN), and filing certain forms through the IRS.
Remember that starting a business in the U.S has become easier over the time. So many successful companies started out the same way you can: with a good idea.
- Million Dollar Guide!! the LLC – How to Start a Business in US - January 17, 2017