Facinating Thoughts

How to start a one owner LLC? June 8, 2010

If you want to start a business but want nothing with a lawyer or a CPA, a single owner Limited Liability Company (LLC) will be perfect. It gives you the minimum fuss but limit your financial exposure to the money you invested into the business. So how do you do that?

1. Make sure your business is not doing something that need professional license (e.g. law, medicine, accounting, financial service, etc.). You can not start a LLC for those things.
2. Google your state LLC law and filing requirement (usually at the secretary of state website).
3. Find a name that’s available in your state (test the name on the state website) and trademark it if you want.
4. Go to IRS website to get a tax id (EIN) for your company.
5. File the “Articles of Organization” with your state LLC filing office and pay fee.
6. Although you don’t have to, you better prepare a LLC operating agreement.
7. Although you don’t have to, you better update your business plan.
8. Create a LLC binder or drawer or other record keeping system.
9. Hold the LLC’s first organizational meeting to adopt the operating agreement and elect yourself as officers such as president and secretary. File minutes of meeting in the LLC record.
10. Open a LLC business bank account.
11. Get liability insurance coverage if needed.
12. Record all ongoing decisions with minutes or written consent forms.
13. Sign lease, agreements, contracts, loans in the LLC’s name.
14. File annual state LLC reports.
15. Pay estimated tax on allocated LLC profits during the year.
16. File annual tax returns.

It’s all about tax and paperwork, really. If you hate paperwork, don’t start business. Do it as a hobby instead. The only difference between a business and hobby is that you can not declare losses when doing a hobby. But again, you can not declare anything if you don’t have a good record keeping, even for a hobby. So suit up smart guy. Do your paperwork!

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