When you have started your own small business, there will come a point that you may have a need to start treating your business model a little more seriously. For the most part, brand new small business owners will use their social security number as the identifying factor of their sole proprietorship. However, forming an LLC (limited liability corporation) gives you a new stance as a business owner in the eyes of the government.
Unfortunately, there is a lot of misinformation out there about forming an LLC, and a lot of small business owners find themselves confused. Take a look at some of the things you should know about forming an LLC if you have a small business of your own.
What are the advantages of forming an LLC?
Forming an LLC will bring along several advantages for you and your business. First and foremost, you and your business become a separate entity by forming an LLC. Therefore, if a customer decided they wanted to sue you over some unforeseen liability, they would not be able to take your personal assets. Having an LLC also makes your small business more official, with an official name and an official tax designation.
Does it cost anything to form an LLC?
The fees for filing for an LLC are not the same in every state in the country, and the differences between states can be pretty dramatic. For instance, the state of Kentucky only charges $40, whereas the state of Massachusetts charges $520, according to LegalZoom. To find out how much it costs in your state, you will have to reach out to the Secretary of State. If you are working with an LLC service, they will be able to track down this information for you fairly easily.
Is it difficult to set up an LLC as a small business owner?
Setting up an LLC is not really all that hard, especially if your business is rather small. The five basic steps of the process include:
In order to start an LLC, it is always best to work with a reliable LLC service to help you through the process. This is not a requirement, but it will ensure all paperwork gets properly filed on your behalf. If you make simple errors in filing or filling out everything, it can severely hinder the timeliness of the approval.