When it comes to setting up LLCs, many people are unaware of what the process actually entails. While starting an LLC can have legitimate benefits, it’s critical to understand the technical information you need to create an LLC. Here are just a few do’s and don’ts that can help you successfully form your LLC.
- DO: Create a finalized business plan
Anybody can file the paperwork to start an LLC, but running one successfully requires a truly business-savvy personality type. Make sure you have a business plan to stick to once your LLC has been created. Don’t just expect things to fall into place naturally. A successful LLC doesn’t just happen; it’s a result of hard work, dedication, and persistence.
- DON’T: Assume the business structure you chose works the same in other states
It’s imperative to understand that the rules and regulations for LLCs and corporations can differ greatly from state to state. According to the National Association of Small Business’s 2015 Economic Report, the majority of small businesses surveyed are S-corporations (42%), followed by LLCs (23%), but different states offer various tax incentives for each. You should also know that the state you file your LLC in doesn’t necessarily need to be the same state you currently reside in.
- DO: Choose the right type of corporation
Don’t just assume that an LLC is best because it stands for ‘limited liability.’ There are advantages and disadvantages to each type of corporation. For example, while S corporations have just one level of taxation, they can also have no more than 100 share holders, and each one must be a resident of the United States. These are important details to discern before deciding which type of business is best for you.
- DON’T: Panic
Sure, there’s a ton of important information to understand before you file for an LLC or corporation, but it’s not impossible to learn it — it just takes time. Many people choose to sit down with a professional and discuss their options, which is a viable option for those who aren’t equipped with the knowledge to handle it themselves. Whichever path you take, know that there are plenty of resources available to help you achieve success.
Ultimately, it’s important to understand these do’s and don’ts before starting an LLC. For more information, contact My USA Corporation.