One of the most popular business structures for a new business startup is an LLC or Limited Liability Company.
One of the reasons why LLC’s are popular is because they provide limited liability protection for the owner(s) for the company. Furthermore, owners of LLC’s also get to avoid the ‘double tax’ that comes with C Corporations because only the owners are taxed and not the business itself.
LLC’s are set up at the state level, and as a result, the requirements for setting one up can vary significantly throughout the country. Nonetheless, there are certain tips you can use that should apply regardless of which state you are in, and those tips are what we are going to talk about now.
Here are four beginner tips for starting an LLC:
Beginner Tip #1 – Choose a unique name
Your LLC name needs to accomplish two things: it needs to be in accordance with the laws of your state, and it needs to truly represent what your business is about. Remember, your business name essentially serves as your brand name and is how you will be recognized.
The best LLC names are easy to spell and pronounce, simple to remember and suggest or imply what products or services you sell.
Beginner Tip #2 – Asset protection is important
Without asset protection, your assets will be vulnerable in the event that you one day find yourself entangled in a lawsuit. Asset protection will be important for literally every type of business owner there is, and setting up an LLC will serve as the base for any effective asset protection game plan.
Beginner Tip #3 – Write an operating agreement to protect Your LLC
You won’t need an operating agreement if you are a solo member LLC, but otherwise, it will be wise to write one. Even though the vast majority of states do not require it, writing an operating agreement can be beneficial because it allows you to choose the operational rules for your LLC. Otherwise, the default regulations of your state’s laws will govern how your LLC works.
Beginner Tip #4 – Gather all the required licenses
Last but not least, you won’t be able to get out of accumulating the required licenses you need in order to set up an LLC. While the license requirements certainly vary from state-to-state, you will still need to gather all of the ones you need.
The most effective way to find out all of the licenses that you need will be to contact the office of your county clerk, and they will inform you which permits and licenses are necessary for you to gather.
Starting An LLC
Setting up an LLC means you have taken a critical step towards fully protecting your personal assets and establishing your business as a legal entity. Don’t forget about these tips when you begin the process of setting up yours.