Choosing the right business name is one of the most important steps in starting your own business. There are many rules and regulations to follow when it comes to naming your LLC.
States typically require that the legal name of an LLC include certain words indicating its business structure. These can be words like “Limited,” or “Company,” or abbreviations, such as “LLC.”
What is an LLC?
When you’re deciding which business structure is right for you, there are several different options to choose from. Some of the most common are corporations, partnerships, and LLCs.
An LLC is a form of business entity that gives owners limited liability protection. This means that in the event of a lawsuit, LLCs can protect their owners’ personal assets like bank accounts and homes.
Many small and medium-sized businesses opt to form an LLC, as it offers a number of benefits that other business structures do not. The primary advantage is that an LLC allows business owners to protect their personal assets while still providing a solid foundation for growth.
The process to form an LLC varies from state to state, but generally involves filing articles of organization with the state where you want to do business. This document identifies your business name, address, and other information about your company. Once approved, the state will give you a certificate or other confirmation document that proves your business is legal.
How to form an LLC
LLCs are a great option for businesses that need the flexibility of a business structure but want protection from personal liability. They are also more flexible with taxation than other types of businesses, such as sole proprietorships and partnerships.
One of the first things to do when forming an LLC is to choose a unique name for your business. Choosing a name that is different from other limited liability companies in your state can help you stand out from the competition and avoid legal issues down the road.
Once you have a name, the next step is to file articles of organization with your state. These documents provide basic company information like your LLC’s legal name, address, and registered agent.
After filing, the state will issue a certificate or other document to confirm that your LLC is in existence. You can then start determining the permits and licenses that you may need to operate your LLC legally within your state.
What are the benefits of an LLC?
A limited liability company (LLC) provides the perfect balance of flexibility and protection for most businesses. It offers asset protection, tax benefits and a professional business image.
Reason #1: Liability Protection
LLCs protect their members from personal liability for the debts incurred by the business. This means that creditors cannot pursue the owners’ personal assets (homes, cars, bank accounts) to satisfy debts owed by the business.
Reason #2: Limited Liability
LLCs offer limited liability, meaning that creditor claims are limited to the value of the business assets and not the owner’s personal assets. This is a huge advantage over sole proprietorships and partnerships, which don’t provide this protection.
Many states require LLCs to file a report every year detailing their business locations, activities and any changes in their management. This keeps their operations compliant with state law and helps avoid potential lawsuits.
How to pay yourself from an LLC
Whether you’re just starting out or you’re a longtime business owner, one of the most difficult parts about owning a small business is figuring out how to pay yourself. There are a few main ways to do this, and each has its pros and cons.
You can pay yourself as an employee, or you can choose to take some of your profits out of the company and put them back into the business instead. Regardless of which option you choose, there are a few important things to keep in mind when deciding how to pay yourself from an LLC.
Generally, if you are an LLC owner who is paying yourself as an employee, you will need to set up an IRS W-2 form to verify that you’re being paid a salary by the LLC. You’ll also need to file your taxes with the IRS, which will include employment and income tax withholdings as well as self-employment tax.
