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Starting a business requires a lot of work. There are several important steps that you’ll need to take for your new business formation. The first few steps are pretty abstract. You’ll have to evaluate yourself, develop a business name and idea, do some market research, and get feedback. You’ll be dipping your toes into the water but not diving headfirst.
After you’ve gone through these stages, you’ll enter the harder ones. Things will get severe at this point as the dream starts to become a reality. Many potential business entities don’t make it out of this stage, thanks to the grueling legal requirements. It can be overwhelming to someone unfamiliar with business law — everything from legal services to LLC filing services and state filing fees.
Fortunately, help is available to get you through the legal process correctly. Skipping legal requirements or rushing through the process can result in financial damage down the road. Take your time and weigh your options carefully during each step. One option you should seriously consider is to structure your business as an LLC.
- Where can you find the best LLC services in 2023?
- What is an LLC?
- How do you start an LLC?
- Structure your business as an LLC to properly protect yourself
Where can you find the best LLC services in 2023?
Finding an LLC service isn’t particularly difficult. There are plenty of individuals and agencies that can help make your business official as a limited liability company. The tricky thing is finding one that offers the best features. Here is a list of the four best LLC services that provide the most benefits:
Northwest Registered Agent
What is an LLC?
LLC is the common abbreviation of a limited liability company. These legal entities are prevalent when structuring a business because they’re highly flexible. You’ll have the option to decide how your business is taxed and the total number of allowed owners. But the main benefit of an LLC has to do with the protection of your assets.
Depending on how your business is structured, your assets can be seized to cover business debts. Sole proprietorships and partnerships offer no protection or separation of your assets. So if your business ends up with $100,000 in debt, you’ll owe $100,000 in debt. You’ll need to take care of the business debt, or you can end up paying with personal assets.
Forming an LLC limits a business owner’s liability (hence the name) over their businesses. It creates a clear separation between your business and your assets. The company’s assets can be seized if your business is sued, files for bankruptcy, or accrues overwhelming debt. However, your assets will not be included and will remain in your possession.
How do you start an LLC?
The exact process of structuring your business as an LLC can vary based on the state. However, there are a lot of similar steps that are universal across the country, including:
Select a name for your business
The first step might sound pretty straightforward, but it can be much more complex than you’d think. You cannot use a company name already taken when forming an LLC. If you’ve ever tried to create a username online, you can imagine how hard it can be to find something unique for a new company.
Some of the covered services offer methods for determining if the name you want is still available. They can also help you to find similar sounds that are still available. Finding a word can be so tricky that you should immediately reserve it when you’ve seen it, even if you’re not ready to file your LLC documents or take the following steps in this process.
Select a registered agent
Most, but not all, states require you to use a registered agent to file the LLC documents on your behalf. A registered agent could refer to an individual, or it can refer to a company that provides incorporation services or business formation services. There are many service providers to choose from, but the primary thing to look for is whether they operate in your state or not.
Prepare an operating agreement
Operating agreements aren’t required legal documents in states. However, creating one is a good idea because it can be a helpful outline of how you expect your business to run. A typical operating agreement provides detailed information about:
- The overall organization of your business.
- The expectations of each owner and their contributions to the company.
- The board of managers and their voting abilities.
- Any restrictions on the selling or transferring of shares.
- The process for adding or removing members.
- The division of company profits and losses among members.
File the articles of organization with your state
You’ll need to file the articles of organization with the Secretary of State’s office in your state. The form is pretty simple to fill out and includes the name, address, and purpose of your LLC. There can be a fee to file this document in some states. It’s also possible that they refer to them as a certification of formation instead.
Structure your business as an LLC to properly protect yourself
Forming an LLC comes with a variety of unique benefits. The process is simple; you’ll have tax flexibility, less compliance paperwork, and fewer ownership restrictions. However, the most important of them is that you can separate your personal assets from your business.
Nobody starts a business intending to fail. Unfortunately, it’s a harsh reality that most companies will fail within ten years of starting. Closing your business can be a rough experience for a business owner. The last thing you want is to have your personal assets seized to cover the bill.
Forming an LLC can be an excellent way to limit the pain of losing your business. There might still be some emotional damage, but an LLC will considerably limit the financial damage. You don’t want to lose your house, vehicle, and savings on losing your business.
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