Do you have a neat business idea or just want to start a side hustle? If you are, here’s something to think about.
Starting a business involves getting various legalities out of the way. This means registering as a business entity, filing taxes, setting up agreements, and getting a business licenses. D
Fortunately, starting a business is easy when you start it as an LLC. Registering as an LLC is the easiest way to legalize your business.
As an LLC or limited liability company, you get to enjoy all the profit of a sole proprietorship minus the legal risks that come with it. As a bonus, being at the helm of an LLC enables you to make faster decisions — which is not something you’d get if you were to register as a corporation.
Getting your LLC is straightforward. If you’re excited about getting your LLC started on the right foot legally, follow these seven steps.
1. Choose a Business Name
Your business’s name is your brand’s signature and sets you apart from your competitors. For this reason, ensure that your business name is unique — and most importantly, available.
To check if an existing business has the name you’ve thought of, you can visit your local Secretary of State Office. You can also check if other businesses have your name by visiting the U.S. Small Business Administration’s site.
2. File Your LLC
File an LLC by filing the articles of organization form your LLC. This is a key document for registering your business as an LLC in your state. To get a copy of the articles of organization form, visit your local Secretary of State’s office.
When filing your LLC, you’ll be asked to select a registered agent. A registered agent is a person or business that will receive legal documents on behalf of your LLC. You can be your own registered agent. Alternatively, you may also hire a professional registered agent service (many companies that file online try get you on their annual service).
Here’s a tip from us. Many of these registered agent services make a quick buck from doing something you can easily perform by yourself. If you would like to save a few hundred dollars yearly, we recommend that you act as your own registered agent.
3. Register for an EIN (for Tax Compliance)
Think of an EIN as a tax identification number for employers. You will need it for when you take employees and file taxes. Most importantly, this is essential for when you get a business bank account.
Registering for an EIN is possible online. You can get an EIN for your LLC at the IRS’s website.
4. Draft Your LLC’s Operating Agreement
An operating agreement outlines the rules and regulations of your LLC. It includes terms and conditions covering everything from how decisions will be made to how you will distribute profits. The operating agreement must also outline the steps to dissolving your LLC should your entrepreneurial ventures go south.
An operating agreement is a critical legal document. This means you might need an attorney’s help to draft one before you make your LLC official.
5. Open a Bank Account
Opening a business bank account is a must if you’re running an LLC. After all, one of the perks of operating as an LLC is the separation of your business and personal assets. You can visit any local bank and open an account, but you will need your LLC documents and — most importantly — your EIN.
6. Be Compliant by Getting the Necessary Licenses and Permits
Depending on your niche, your LLC will need certain licenses and permits to legally operate. Most businesses will need a business license even if operating out of your home. And businesses like financial planners may need additional certifications or even personal trainers in some states.
The Easiest Way To Legalize Your Business Is With Drafted Legal
If you don’t mind several layers of paperwork and making frequent trips to your local Secretary of State, you’ll find that starting your LLC is straightforward. However, what if we told you that there’s an easier way?
At Drafted Legal, we offer pre-drafted templates that are easy to use and fill. Choose from our templates or get our entire LLC bundle.
Also, if you’re unsure about what to have ready before you register your LLC, we’ve got you. Download our free legal checklist and make LLC registration easier for yourself.