“I want to create an LLC.”
You’re already off to a great start. Ambition is the lifeblood of any successful business, big or small, and there are quite a few advantages to be had when you look into creating your very first partnership. Learning how to form an LLC is a time-consuming process, but it doesn’t have to be a difficult one. You can learn about the benefits of an LLC, as well as what you should expect when it comes to your own unique state taxes, by reading the list below.
How many small businesses are there in the United States? More than you may think. A 2010 study revealed nearly 28 million operating throughout the country, with this number also taking into account the over 18,000 firms with hundreds of employees to their name. We all benefit from small businesses being allowed to branch out and seek out their greatness through collaboration, cooperation and a thirst for more. To create an LLC is to take your brand, customers and employees to the next level.
Let’s start off with the most simple points. There are primarily three rules an LLC name needs to follow. It needs to be different from an already existing LLC in the same state (which may or may not be difficult in of itself). It needs to indicate it’s an LLC. Lastly? It must not include words actively restricted by your state. The state of New York, for example, restricts the use of ‘annuity’, ‘benefit’ and ‘loan’. Scratching this off the list will shorten the timeframe between your business now and your business tomorrow.
Your state will also influence other aspects. New York, Arizona and Nebraska all require the formation of an LLC be announced in the state newspaper. This is also known as a ‘Publication’. Your LLC ownership can be expressed in two ways — by percentage or by membership. A corporation is allowed to re-elect S corporation status only on the fifth year after the year in which the termination came into effect. As of a recent Small Business Economic Report? The majority of small businesses are S corporations, with a significant chunk being LLCs.
Taxation is going to be much different once you’re accepted as an LLC. The two available options for corporations to be taxed is either as a C corporation or an S corporation. S corporations, however, only have one level of taxation and the IRS will automatically classify an LLC as either a partnership or what’s known as a ‘disregarded entity’. The latter part depends on whether or not there’s more than one owner. If this seems like a lot to take in, never fear. LLC advantages are learned as you go and the mere fact you want to create an LLC is a fantastic foundation.
How should you go about doing all this? Learn the local laws of your state, brew up some ideas for your title and start thinking about where the next few years are going to take your brand. More businesses nowadays are wanting to create an LLC to give them more options when it comes to making money, meaning competition is fierce and now has never been a better time to get started. You can form an LLC online or speak with a representative in person to smooth over the process of transitioning from one model to the other.
You want to create an LLC? You’re already doing a great job.