WHAT IS AN LLC?
Odds are, if you’re reading this, you’re in the process of thinking about or beginning the initial steps of starting your own business. While a congrats is in order, let’s look at some basic steps that should be taken first; chiefly, what is an LLC?
A limited liability company, LLC for short, is a popular type of business structure that can be formed to operate and ensure a business. The limited liability company provides the liability protection of a corporation for owners, with the advantage of being treated as a sole proprietor or partnership for taxation purposes. In layman’s terms, it helps protect your personal assets by limiting the liability to the assets of the business itself, providing both protection and flexibility.
HOW TO START AN LLC?
So, how does one start an LLC? While applications and processes vary state-by-state, most follow a few ‘general’ guidelines. Here are the basics:
(For this post, we will be looking at the steps taken in the state of Pennsylvania. For other states, check the specifics on your states government business-startup website.)
- What’s your business name? You’ve probably already come-up with the name for your business, but now is the time to confirm it. First, make sure the name of your business isn’t already in use. In Pennsylvania, you can look up corporations in an easy search, here: https://www.corporations.pa.
In addition, Google it! If you have a business name that, when entered into a search engine, brings up negative stories, press or links to similarly-named businesses… well, it’s better avoided than having attention drawn to it! (For example, let’s say your last name is Enron, and that you’re planning to open your own marketing company called ‘Enron Marketing’. Go ahead and Google ‘Enron’. Catch our drift? A few clicks can save you time, money and headaches!)
- Once you have a name picked, it’s time for some paperwork! In Pennsylvania, all paperwork steps to apply for an LLC can be found here: https://www.corporations.pa.
gov/ You will need to register for and create a new account under the ‘login’ tab, on the top-right corner of the site.
- Once logged in, scroll down to the ‘Start or Manage Business Filings’. Click on ‘Domestic Limited Liability Company’. Select the Certificate of Organization.
- Fill out the form. While it should be fairly self-explanatory, one thing to note is that you probably won’t be a professional LLC – so there’s no need to worry about that! Professional LLC’s are reserved for doctors, lawyers, etc.
- Pay your $125 fee to the state. Save your receipt! This is likely your first business expense, start the good habit now.
- After a few days you will receive an approval notification via email. This approval can also be obtained from their website upon being notified.
- Congrats! You are now an official LLC with PA! However, there’s still another step that needs to be completed – the IRS needs to know of your new business!
- Apply for an Employee Identification Number, or EIN, online, for free. Clicking on the following link will take you there: https://www.irs.gov/
businesses/small-businesses- self-employed/apply-for-an- employer-identification- number-ein-online
- Now you’re official! You can open a bank account, apply for loans, hire an excellent accounting company, etc.
Having an LLC is just one step that allows you, a business owner, to run your own show. If you have any additional questions about an LLC, or any of the steps involved, we’re just a phone call or email away!
As always, thanks for letting My Numbers Guy be YOUR numbers guy!
*Information adapted from dos.pa.gov.