General question and answer’s about what is an LLC why should you consider an LLC How do you get paid etc.
These questions are being answered from a “General” perspective and are not state specific. Check with our information on our website that is dedicated to starting your business.
How much will it cost to form my LLC?
Your cost for starting an LLC will vary, why you ask? Firstly state fees will vary from state to state. You can expect to be paying somewhere between $50 and $500 to get the LLC formation up and running.
You will then have annual expenses for filings approx. $100 – $200 a year dependable on your state of registration.
What is a registered agent, do I need one?
A person or business that is nominated to receive all mail and to send legal documents on behalf of your company. In some states they are referred to as the agent for service of process.
All LLC’s will require a registered agent regardless of state.
What is an LLC operating agreement?
Firstly an operating agreement is not required in each and every state. However the value of ensuring you have an operating agreement is crucial for protection of the running of your company.
- Also if you are a multi member LLC this agreement will outline each member’s responsibility to the LLC.
- Having an operating agreement in place is very important in the unfortunate event of a member dispute or lawsuit from a third party.
What are the articles of organization?
Articles of organization for your LLC refers to the legal document that you will submit to the state within which you are forming your LLC.
This document will outline such items as your legal entity name, the purpose of the business and also the registered agent name and address. These are also often referred to as the certificate of formation or certificate of organization.
How will an LLC be taxed?
One of the advantages and attractions of an LLC is called pass-through taxation. Meaning that the profits generated by the LLC will “pass-through” to its member/s. Your accountant will issue each member with a K1 who then reports the additional income on their personal taxes.
Checking with your state is always advisable as although LLCs are pass-through entities, there are several types of state-level tax that may still apply to your LLC and should be researched.
State and County Sales Tax
- Selling taxable goods or services, you will need to register for a seller’s permit and collect sales tax on behalf of your state.
- Is your new company selling goods or services that will be taxed in your state? If so then you will need to register with the state so that you can pay your sales taxes that you will be collecting on each sale.
- These again depend on your state and will be broken down into state and county fees that will be paid monthly or quarterly depending on your state of registration
What are the main benefits of an LLC?
- The main benefits of an LLC and why it is a popular business entity are as follows.
- An LLC offers the liability protection of a corporation with the benefit of pass-through taxation.
- In addition to this an LLC is affordable and very easy to maintain. Making it the most popular of business entities.
How quickly can I form an LLC?
Following registration guidelines and processing everything yourself will take approximately -3 weeks depending on your state of registration. Also varies from state to state.
Can I fast track my LLC formation
Many states offer same-day or expedited LLC formation for an extra fee. You will also find many services and law firms that also offer same day rush services.
Do I have to have a lawyer from my LLC?
Short answer NO. However you are starting a business and like everything you need the right foundation in order to be successful.
You may well find it better to hire a professional firm or lawyer to form your LLC. Sometimes it’s best to stick to what you do best and let the pro’s do the rest.
Do LLC’s have a board of directors?
Short answer NO they do not. LLC’s are managed by their owner, members or the managing member. They do not have shareholders like a public company.
Can an LLC have shareholders?
No, an LLC is owned by its members; it is not a publicly traded company and therefore does not have shares to sell on the stock market. Being owned by its members the profits are split as per written in the operating agreement.
How do I get paid from my LLC?
How you get paid depends on the decision of how the LLC will be taxed.
- In a single-member LLC (SMLLC) or multi-member LLC (MMLLC), you can pay yourself:
- With a distribution that passes through to your individual tax return
- With a salary and distribution as an S corporation (S corp)