How to Start LLC for Small Business Owners: 8 easy steps

Starting an LLC can be a smart move for small business owners. Having assisted many entrepreneurs in setting up their LLCs, I can assure you it’s simpler than you might think.

An LLC protects your personal assets and offers tax benefits while being relatively easy to form and maintain. Let me walk you through the key steps to get your LLC up and running smoothly.

For exceptional service, I highly recommend Tailor Brands, they make the process seamless and efficient.

Ready to get started?

Let’s dive into how to set up your LLC and start your small business well.

Do small business owners need an LLC for their Business?

Small business owners don’t always need an LLC, but it can be a smart choice. I’ll explain why many entrepreneurs opt for this structure.

An LLC protects your personal assets. If your business faces legal issues or debt, only your company assets are at risk. Your home, savings, and personal property stay safe.

LLCs offer tax flexibility. You can choose how the IRS taxes your business. This might lead to tax savings, depending on your situation.

What are the Benefits of Starting an LLC for small business owners?

Starting an LLC offers several key advantages for small business owners. It protects personal assets, provides tax flexibility, boosts credibility, and safeguards your business name.

Personal Asset Protection

As a small business owner, I know how crucial it is to shield personal assets from business liabilities. An LLC creates a legal separation between me and my company. This means if my business faces lawsuits or debts, my personal savings, home, and other assets are usually protected.

Pass-Through Taxation

One of the biggest perks of an LLC is its tax flexibility. By default, LLCs enjoy pass-through taxation. This means the business itself doesn’t pay taxes. Instead, profits and losses “pass through” to my personal tax return.

Enhanced Credibility and Professionalism

Having “LLC” after my business name instantly boosts my company’s image. It shows potential clients, partners, and vendors that I’m serious about my business.

Protection of Your Business Name

When I form an LLC, I get exclusive rights to use my business name in my state. This prevents other companies from operating under the same name, reducing confusion and protecting my brand.

Name protection helps me build a strong identity for my business. It safeguards my marketing efforts and reputation from being diluted by similarly-named competitors.

Also Read – How to Form LLC for Home-Based Business

How to Establish an LLC for Small Business Owners?

1. Choose a State to Register LLC for Small Business Owners

I recommend registering your LLC in the state where you’ll do most of your business. This is often your home state. It’s usually simpler and cheaper. Some states have lower fees or taxes, but filing as a foreign LLC in your home state can offset those savings.

2. Choose an LLC Name

Pick a unique name for your LLC. It must include “LLC” or “Limited Liability Company.” Check your state’s database to make sure it’s not taken. Avoid names that sound too similar to existing businesses.

3. Appoint a Registered Agent

A registered agent receives legal papers for your LLC. This can be you, another member, or a professional service. They must have a physical address in your state and be available during business hours.

Using a professional service can keep your personal address private. It also ensures you don’t miss important documents if you’re away.

4. File Articles of Organization

This is the official paperwork to create your LLC. File it with your state’s business division. It typically includes:

• LLC name
• Registered agent info
• Business purpose
• Management structure
• Member names

Fees vary by state. Processing can take a few days to weeks. Some states offer expedited filing for an extra fee.

5. Obtain an Employer Identification Number (EIN)

An EIN is like a Social Security number for your business. You need it to:

• Open a business bank account
• File taxes
• Hire employees

6. Create an Operating Agreement (Optional)

Most states don’t require this, but it’s a good idea. An operating agreement outlines:

• How your LLC will run
• Member roles and responsibilities
• How profits are shared
• What happens if a member leaves

It can prevent misunderstandings and legal issues later. Even single-member LLCs can benefit from having one.

7. Open a Business Bank Account

Keep your personal and business finances separate. This protects your personal assets. To open an account, you’ll need:

• EIN
• Articles of Organization
• ID

8. Register for Taxes and Licenses for Small Business Owners

Check what taxes your LLC needs to pay. This might include:

• Income tax
• Sales tax
• Payroll tax

You may need special licenses or permits depending on your business type and location. Check with your state and local government.

3 Best LLC services For small business owners

Starting an LLC can be simpler with the right service. I’ve found three top options that stand out for their features and value.

Tailor Brand (Editors Choice)

Tailor Brands offers a unique blend of LLC formation and branding services. Their packages start at $0 plus state fees, making it budget-friendly for new businesses. I was impressed by their AI-powered tools that helped me create a logo and brand identity quickly.

Their platform is easy to use, even for beginners. I could form my LLC and get a complete brand kit in one place. This saved me time and ensured my business had a professional look from day one.

Tailor Brand also provides ongoing support for legal compliance and brand management. I found this helpful as my business grew and needed to adapt.

NorthWest Registered Agent

NorthWest charges $39 plus state fees for LLC formation. What sets them apart is their privacy protection and personal service. I appreciated that a real person was assigned to my account.

They offer a year of free registered agent service with LLC formation. This was a big plus for me, as it’s a required service that can be costly elsewhere.

MyCompanyWorks

MyCompanyWorks provides fast LLC formation services with a satisfaction guarantee. Their basic package includes many features that other services charge extra for.

I found their 90-day compliance alert system particularly useful. It helped me stay on top of important deadlines and filings. Their customer support was responsive and knowledgeable.