Get These 6 Things Straight Before You Set Up an LLC

LLC
LLC

company setup

Establishing your own company is for sure very exciting because you become independent, you get to make all important decisions, and many other things. Still, you should always remember that it also comes with a huge responsibility.

As a business owner, you will have to deal with numerous tasks and one of them revolves around the business structure. If you live in the United States, you have the opportunity to create a limited liability company, or also known as LLC.

What does it represent? It’s a type of company that combines numerous features of partnership along with corporation structures. Owners of LLC are often defined as members. If you’re having second thoughts about LLC, then maybe you should take a look at these facts below before you make any further decisions.

It Provides You With Management Flexibility 

Generally speaking, corporations usually have a fixed management structure that includes a board of directors and officers, as well as the shareholders. All of them play different roles when it comes to dealing with important daily operations.

Furthermore, the shareholders get to meet every single year, choose directors and make crucial decisions that are corporation-related. On the other hand, the situation is a bit different when it comes to LLC.

In this case, you do not have a formal structure and here even only one person can make all those important decisions. This means that you are much more flexible when it comes to dealing with decisions regarding future plans, operations, hiring, etc. 

Do You Have Enough Money For It?

Yes, this is for sure the question that many newbies have a tendency to ask. If you’re wondering how much does it cost to set up an LLC in 2021, you are not going to get just one answer because the price may vary. According to some research it ranges from forty US dollars and can go up to five hundred US dollars, however, the average cost is slightly above 130 US dollars.

It’s Not Going To Save You Money On Taxes

This is definitely a number one misconception. Namely, a lot of people think that if they set up an LLC, they will be able to save a substantial amount of money on taxes. Well, that’s not true at all!

In fact, this shouldn't be perceived as a tax-saving method because there isn't any different when it comes to tax rates between LLCs and sole business owners. The primary goal of it is simply to provide you with legal protection.

LLC Equals Liability Protection

Speaking of protection, certainly, the biggest benefit of starting an LLC is precisely this. If you're planning on blasting off a smaller company, then you should definitely consider LLC as your option. 

Namely, with it, a business owner’s personal assets are being protected in case the firm is forced to give some money for legal settlements or goes into debt. Just bear in mind that your assets will not be at any risk as long as you do not poke the corporate veil.

Do You Need Help From Investors Or Not?

A lot of new business owners tend to do this. But does it mean that it’s necessary? Definitely not. Just because others are doing it, it doesn’t mean that you must do it as well. If you’re not tight on a budget, then you should definitely rely solely on your money.

Why is that? Well, that’s because when investors lend you some cash, they usually expect to have returns on their investments, which can further complicate things. On the other hand, if you manage to negotiate and make a good deal with them, then maybe things can turn out great. 

So what can you do? As it was mentioned above, you can always create an agreement where you will accentuate that your corporation will return their cash once you have liquidated or sold the LLC. This way, nobody is going to be tricked.

Choose A Unique Name 

A majority of states demand registered businesses come up with a name that is very distinguishable from any other company in the state, hence, it would be smart to start thinking about the name as quickly as you can.

You do not want anybody else to claim it. Even if you’re still not ready to set up an LLC, it would still be recommendable to reserve the name for a certain period of time until you make a decision.

Every decision you make comes with certain consequences, therefore, you have to be very careful and smart about it. If you’re still having doubts about LLC, then you should surely read this article to see if this is the right thing for you or not.