LLC 101: How to Form a Limited Liability Company for Your Business
Thinking of forming an LLC? Here’s a quick guide on why and how to do it. And Vivid IP can help!
Are you ready to turn your hobby into a business? Make your side hustle your full-time job? Launch that company you’ve been dreaming about for years? If so, it may be time to solidify the legal foundation of your business by starting a Limited Liability Company (LLC).
Vivid IP represents businesses–big and small–in the registration of their LLCs, drafting of their corporate governing documents, and serving as the registered agent for Georgia-based LLCs.
Whether you sell music, medical devices, or professional services, you may want to consider formalizing your business under an LLC. Here’s why and how.
What are the benefits of an LLC?
1. Limited liability protection: As a member of an LLC, your personal assets are largely protected from the legal liabilities and debts of the business, which means if your business is sued, your personal assets such as your home, car, or savings account are less likely to be seized to pay off the business debts. However, these protections are not bullet-proof and can be challenged in cases where a member of an LLC acts in bad faith.
2. Flexibility in management and ownership: LLCs can be managed by the members themselves or by appointed managers, according to the LLC’s customized internal governing document called an “operating agreement.” This allows for flexibility in how the business is run and who makes decisions. LLCs can have multiple members, making it easy to bring on new investors and partners.
3. Business bank account: Every business needs a dedicated bank account to pay expenses and receive income separate from anyone’s personal bank account, and one of the first steps toward opening a business bank account is to register an LLC.
4. Tax options: LLCs can choose how they want to be taxed: as a sole proprietorship, partnership, or S-corporation. This allows for the members to choose the tax structure that is most beneficial for them and their business.
It’s important to note that the specific benefits of an LLC will depend on the individual circumstances of the business and the laws of the state where it is located.
How do I start my own LLC?
If you want to register your own LLC, here are some helpful tips that may vary in order and by state:
1. Name: Choose a unique and distinguishable name for the LLC that complies with the naming rules in your state. It would be beneficial to conduct a name search to ensure that the desired name is available for use.
2. Articles of Organization: File articles of organization with the state government agency responsible for business entities, such as the secretary of state or the department of corporations. The articles of organization must include the name and address of the LLC, the names and addresses of the members, and the purpose of the LLC.
3. Operating Agreement: If you have partners or investors, create an operating agreement that outlines the rights and responsibilities of the members, such as the management structure, profit and loss distribution, and decision-making processes.
4. Licenses: Obtain any necessary licenses and permits to operate the business, such as a sales tax permit, occupational license, license to operate in a particular industry, etc.
5. Employer Identification Number: Register for state and federal taxes and obtain an employer identification number (EIN) from the Internal Revenue Service (IRS).
Once you have your approved LLC registration, your EIN, two forms of personal identification, and an initial cash deposit, you are now ready to open a business bank account. Contact the bank ahead of time to confirm the minimum balance required to open a new business checking account.
What is a “registered agent”?
A registered agent is a person or entity tasked with registering the LLC, receiving official notices for the LLC, or both. Any business owner can serve as her own registered agent or outsource that role to a third party.
Vivid IP offers registered agent services, in addition to LLC formation services. Being a registered agent for a Georgia-based LLC means that Vivid IP would be eligible to receive legal documentation, such as service of process (i.e., notice of a lawsuit) and official government communications, for that company.
Our services for LLC registrations, renewals, and registered agent services are charged on a flat fee basis as an add-on benefit for our transactional clients. Operating agreements and corporate bylaws can be drafted and customized for your business at our hourly rate.
Want to learn more about Vivid IP’s LLC services? Call us for an initial consultation at (404) 474-1600 or email info@vividip.com.