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Thursday, April 21, 2011

Steps Taken To Open LLC

Hello again!  I am here to explain what steps I have taken to get my LLC up and running.

First things first, talk with a Labor Lawyer and Accountant. This is a hugely important step, hence the first one!  The reason you go to an attorney is so that you can understand all the responsibilities of your business.   Remember, you will not be you anymore, you will be your business.  An LLC is an entity, like a person, that has legal responsibilities that you must at the very least know about.  There are many types of options to consider when opening a new business.  The attorney will be able to consider your situation and help you come to a decision on what type of company to open, e.g. LLC, S Corporation and so on.  An LLC is a Limited Liability Company, I'l get into what an LLC is a bit later.

Now the accountant is there to help you understand the Tax liabilities of your company.  There are many different option on how you can file and what forms you use.  If your in my shoes, no employees, makes less than 50,000 a year, then you will probably opt for the tax burden to pass through the LLC.  What this means is that since you are the Sole Proprietor of the business you will end up filing your taxes for your business as personal income.  However you will want to open a business account and deposit all your earnings from the business into this account.  This will make it easier come tax time, as long as you don't use the account as your personal account!  More to come on the financial issues as well, since we will need to cover how you plan to keep track of your account.

Come up with a business name, have a few since sometimes the names are already taken.

Now that you know why it is best to consult the experts, and now that you have your ready to get started.  If you chose to open an LLC your path can be similar to mine.  Now what your going to need is to go to a SBA, the university in my city has a division of the Small Business Association that helped me.  I believe all SBA locations will help you for free, so take advantage of it!  What they will help you with is to get some paper work together, the Articles of Organization and Statement of Acceptance of Appointment by Designated Initial Registered Agent.  These forms will need to be mailed to your states Public Regulation Commission, with a 50.00 money order.  Not sure if the fees are different in different states, I live in New Mexico.  Mail the documents and wait about 2 weeks.

You now have a Certificate of Organization from the PRC that shows your selected business name can do business.  At this point you can schedule some time with your SBA to finish up the paper work.  What is left is a Federal Tax Id number and a Gross Receipts Tax Id number(State Taxes).  The SBA will help you fill out the CRS form but you will have to take it to your local Taxation and Revinue Department for submission, can take a few days.  Once you have a your Federal Id and CRS Id you will be done with the setup of your business!  Only thing left is to open a business checking account.

Go to a bank you select to have your business account.  Look around for the best deals, what services they offer businesses and such.  Once you have selected one take your Certificate of Organization and your Federal Tax Id number to the bank.  They will help you get it all up and running, however most of the time they require some money, mine was 100.00, to be deposited into the account at the time of creation.

Now your ready to do some business!  Some helpful tips, utilize your SBA as they will want to help you achieve success!  Allocate time every day, weekends too, to spend building your business and doing research.  Call contacts and start building your client/customer list.  Call SCORE, or get online at http://www.score.org/index.html.  They will also help you for free, great resource to help you navigate the new waters of your business life!  Get involved with online communities of business people, I'll post some places I find helpful when I have some more time. Always remember to have fun in what you do!

Bye for now and Good Luck!

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