Setting up an LLC: A Small Business Owner’s Guide
As a small-business owner, I have no regrets about taking the time to set up an LLC. Depending on what other services you need, a paid LLC service might be for you. From mailing addresses to consultations with an attorney, LLC services offer plenty of choice.
When I started freelancing, I had a simple goal: I wanted to cover my monthly rent, which was about $1,200 at the time. Luckily, my business took off, and within a few years, I was turning over six figures. I was thrilled, but I also realized that I needed to operate my career like a business, not a side hustle.
One of the best ways small business owners can protect themselves is by forming a limited liability company, or LLC. An LLC is a legal structure that keeps your personal finances separate from your business assets and debts. Having an LLC lets you unlock other good business practices, like opening a business bank account or business credit card. It also keeps your taxes fairly straightforward since profits pass through the LLC to its members, and you pay on your personal tax returns.
All of that might sound complicated, but it boils down to a simple question: Is setting up an LLC a good idea? For me, the answer is definitely. I love having separate business bank accounts, signing contracts with clients as an LLC, and knowing that I’m protected legally.
How to get started with your LLC
LLCs are regulated at the state level, and each state does things a little bit differently. It’s best to look at the LLC regulations in your state. In my state, I started with the Secretary of State’s office and followed their directions.
I was able to do everything through the state website, but if you need a bit more guidance, these websites can help. Many also provide additional services, like branding or web hosting. Remember, in addition to the fees listed below, you’ll need to pay state filing fees and likely an annual renewal fee with your state to keep your LLC in good standing.
LegalZoom
LegalZoom is a well-known online legal service platform that’s available nationwide. The company offers three different plans for forming your LLC:
Basic (Free): This one is free (you just cover the filing fees with your state) and simply registers the formation of the company.
Pro ($249): You get an employer ID number (EIN), which you need to file taxes and use on paperwork for your LLC. You also get up to 150 legal documents a year, plus you get guidance on operating an LLC.
Premium ($299): This includes an LLC formation, EIN, and consultation with a business attorney in your state.
Since I’m the only person involved with my company, and the services it provides are fairly straightforward, I’d be comfortable with the Basic package. However, if you have partners or more complicated services, the extra guidance from the Pro or Premium package could be beneficial.
Northwest Registered Agent
Want to register a business as you travel? Northwest Registered Agent lets you form an LLC for just $39, plus your state filing fees. It also acts as a legal address that can accept mail and legal documents while you’re off being a digital nomad. Despite the low cost, you get a lot for your money, including a business mailing address, phone number, website, email, and one year of registered agent services.
I personally love that Northwest emphasizes that they’ll give you everything you need to print and take to the bank to open a business bank account. From experience, I know opening a business bank account can be a major hassle, so this alone is well worth the $39.
Tailor Brands
If you need your company to stand out, Tailor Brands is a great option to register your LLC. Not only does the company facilitate your registration for free, but they can help you create a logo, trademark it, and refine your branding (for a charge). All of that goes a long way in helping your business look professional, which attracts customers your way.
ZenBusiness
ZenBusiness not only sounds calming, but it’s also endorsed by entrepreneur Mark Cuban. I like that ZenBusiness offers web hosting, giving you a one-stop shop to get your online business up and running. It delivers three straightforward options for creating your LLC:
Starter (Free): The starter level allows you to file your LLC in two to three weeks. That’s a bit slower than some rivals, but hey, it’s free. You can also select from add-ons, including higher-speed filing ($79) and a business email address ($25 annually).
Pro ($199 a year): The Pro level includes faster filing, which takes about one to five business days. You’ll also get an operating agreement, which is key if you have partners in your LLC.
Premium ($349 a year): The Premium level includes fast filing, a business website and email address, business documents, and more.
FAQs
– It costs between $50 and $200 to form an LLC online. State filing fees will vary. The online provider you choose will also charge a fee to file using their standardized forms, and many services offer multiple price points with different levels of service.
– The best LLC formation service is a popular option like ZenBusiness, LegalZoom, or Northwest Registered Agent. The best fit depends on your specific needs and budget.
– Yes, you can form an LLC without a service by filing directly through your state’s business website. The benefit to using a service is that it will compile the forms and documents necessary to meet your state’s specific requirements.
– You don’t typically need an attorney to form an LLC, but an attorney can be helpful if your business has a complex structure or multiple owners.
In conclusion, setting up an LLC is a crucial step for small business owners looking to protect their personal assets and operate their business professionally. With a variety of online services available, forming an LLC has never been easier. Consider your specific needs and budget when choosing a service, and enjoy the benefits of running your business as a legal entity.
