For a first time business owner, forming your very own corporation can at once be incredibly exciting and scary. You know you’re standing on the cusp of standing. You’re taking a leap. Once this is done, things will change forever, hopefully in a good way. Compared to all that, it seems like an easy enough process to pull off. Here are a few tips to guide you through it:
What is it?
A limited liability company or LLC works and shares some basic features with a partnership. There are few default rules that are outline in the U.S. Tax Code by the Internal Revenue Service. If there are more than one owner in the LLC, by default it is set up as a Partnership and separate Partnership Tax Return (form 1065) must be filed on annual basis. In the case when there is only one owner of the LLC, then by default, the LLC is considered to be a Single Member LLC (SMLLC) and the owner must report all of LLC’s income and expense activities as a part of the Individual Tax Return (Form 1040) and on Schedule C. In addition, there are some Publication requirements mandated by State governments as a part of the LLC Set Up process. However, LLC may elect to be treated as a Corporation (Form 1020) or make an election to be treated as subchapter “S” Corporation (Form 1120 S) to tax treatment purposes.
The difference lies in how an LLC keeps your personal assets protected, all without the tiresome formalities as well as paperwork and even fees that some companies require. There are different rules for forming an LLC, depending on which state you are, says the Wall Street Journal.
Charges and Fees
Filing fee for setting up a LLC usually go from 225.00 dollars to 275.00 dollars. Additional publication fees, depending on the county of publication, can range from 500.00 dollars to 1,500.00 dollars. Make sure you ask around if there are any other requirements. Some states have more on their registration lists than others.
Hiring Help
Get a professional accountant to get your affairs in order. Sorting through the money and legal tangle early on allows you to get your business up and running that much sooner. So get help. You might not need a lawyer to draw it all up, but having one to look over the deed and make sure you’re legally covered in every way that’s possible keeps things on the safe side.
Getting Licenses
While an LLC is important, it is not your business license; don’t confuse one with the other. That means you still need a form of local, state or federal license for your operations. Running with a license keeps your company from costly fines so it’s a good protection to have from fear.
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