Can You Form an LLC Entirely Online for Your Brick-and-Mortar Business?
If you run a brick-and-mortar business, whether it’s retail, a restaurant, or a professional services business that involves a real-world storefront, office, warehouse or other workspace to meet with customers, you might wonder how to file an LLC online. The good news: it’s totally possible to form an LLC online, even if your business is brick and mortar.
Forming an LLC for your brick-and-mortar business doesn’t have to involve a lot of complicated steps, long phone calls or visits to multiple government agencies.
Learn more about the process of creating your LLC and how it can help your business grow.
Why an LLC Is a Good Option for Your Brick-and-Mortar Business
No matter what kind of business you own, forming an LLC can be a good choice to set up a legal business entity for your business. A whole 80% of small businesses are LLCs, and there are a few reasons why LLCs are such a popular choice of business structure:
- Personal Liability Protection: Forming an LLC gives you business a separate legal identity that is different from your personal identity and personal finances. In certain worst-case scenarios, such as a lawsuit against your business, an LLC gives you a “corporate shield” that protects your personal assets.
- Simple to Manage: Some corporate entities like a C Corporation require more extensive filing requirements and compliance processes, such as hosting an annual shareholders meeting and appointing a board of directors. The LLC is simpler and more flexible, especially for solo entrepreneurs or small businesses with just a few employees.
- Pass-Through Taxation: LLCs are treated as “pass-through entities” for tax purposes, meaning the business itself does not have to pay corporate income tax; instead, the LLC’s business income “passes through” to the business owner’s personal tax return. Depending on your overall tax situation, pass-through taxation can potentially help you save money at tax time, especially if you choose to have your LLC file taxes as an S Corporation.
What Are the Steps to Form an LLC Online?
Forming an LLC online requires you, as the business owner, to go through a few steps to officially create your business as a legal entity:
- Choose a Business Name: Before you start setting up your LLC, make sure you have a good name for your business, and make sure the name is not already taken by another company. Choosing the right business name can help your business build a brand and attract customers. Do an online business name search to make sure your choice of name is available.
- Gather Information for the Articles of Organization: As part of the process to officially set up your LLC, you need to provide your state regulatory authorities with more details about your business, in a formal document called Articles of Organization. (Some states use a different name for this formal document; for example, Texas refers to it as a Certificate of Formation.) Information to provide on your Articles of Organization will typically include the business name, owners of the business, location of the business, names of any co-owners or business partners and more. Most states will let you access the Articles of Organization/Certificate of Formation form online, and you can see what information is required before you fill out the form.
- Choose a Registered Agent: LLCs are required to have a designated “Registered Agent” — a person or business that serves as an official representative to receive official notices and correspondence for your business. As the LLC owner, you can choose to serve as Registered Agent for your own business, or you can appoint another person or choose a professional Registered Agent service to do it for you. Depending on the state, you might need to provide the name of your Registered Agent on the Articles of Organization, or on an additional form such as a Statement of Information.
- File the Articles of Organization Online: Once you have all the information collected and you know your business name and Registered Agent, you need to officially file the Articles of Organization/Certificate of Formation for your business. This document needs to be filed with the state regulatory authorities (usually the Secretary of State for your state). Most states will let you file your Articles of Organization online via special online forms or processes; for example, the State of California offers online filings via the bizfile California online portal. Depending on the state, you also might have the option to download a fillable PDF, print and mail your documentation on paper instead. Most states have shifted to online filing and encourage people to file documents online for faster service, but will also accept files via mail or in-person drop-off.
If everything in your Articles of Organization documents is correct and there are no duplicate business names already existing, your business will be made “official,” sometimes in a matter of weeks, sometimes sooner depending on the situation in your state. If you want to form your LLC faster than the standard filing time, you can pay an extra expedited fee with Incfile to get your LLC filed faster.
Legal Issues with Forming an LLC Online
Most Secretary of State offices and other regulatory authorities are trying to provide a wider variety of services to the public with online technology. Forming an LLC online is legally the same as forming an LLC by mail. As long as the state obtains valid documentation that is correctly organized and presented, and as long as you are requesting an LLC for a business name that does not already exist, your online LLC application can be approved and certified in the same way as documents written on paper.
The most important legal aspect of forming an LLC is that it establishes your business as an official legal entity that exists separately from your personal identity and personal finances. By forming an LLC with the state authorities, you are showing to the world that your business is “real” and official and that your business deserves to be recognized as a legal entity with a bank account and various tax advantages, and with liability protection for the business owners.
Next Steps After Forming Your LLC Online
After your LLC is officially formed, it’s time to take the next steps toward enjoying the benefits of your new business entity. The good news is that all of these steps can also be completed online:
- Get an Employer ID Number: The Employer ID Number (EIN) is a tax ID for your business. Just like a Social Security number (SSN) for an individual person, your business’s EIN helps identify your business to the government for tax purposes and makes your business “real” and legitimate in the eyes of the law and the financial system. Your EIN will be used when filing taxes for your business, setting up invoices for clients and establishing a business banking relationship for your company (see the next step).
- Set Up a Business Bank Account: Once you have an EIN, you can get your business set up with its own business checking account. Not only does this help keep your business and personal finances separate, but it also helps you build credit under your business name. When you set up your business bank account, you might want to get a few accounts set up right away: a business checking account (to hold your business’s everyday cash, receive payments and pay bills for the business), a business savings account (to save money for taxes or for other purposes), a business credit card (to help pay for bills and manage spending for your business) and – if you qualify – a business line of credit (to help cover cash flow shortfalls, pay bills and otherwise manage the ongoing cash needs of your business).
- Get Business Licenses and Permits: Depending on what kind of brick-and-mortar business you have, you might need certain types of business licenses and permits to run your business and stay in compliance with state and local laws and building codes. Incfile offers a Business License Research package to help you navigate the various rules and laws for your industry and location.
- Get a Trademark: If you have a unique business name, or a particularly special product or service name that you would like to create as a memorable, can’t-miss brand that you own in the marketplace, you might want to get a trademark for your business name, product or service.
- Manage Your Ongoing Business Filing Requirements: Once your LLC is formed, that doesn’t mean you’re done with business filings. Different states have different requirements, but as your business continues into the future, all LLCs must file some sort of annual report, biennial report or other types of ongoing official business filings to confirm that you are still in business and still in good standing with the state authorities. If you fail to file these reports on time, you might lose the ability to do business in your state, lose the tax advantages of being an LLC owner or face other legal consequences.
How Incfile Can Help with Online LLC Formation
Forming an LLC online can be complicated; you don’t have to go it alone! Incfile offers a variety of LLC formation packages, depending on your needs. Form your LLC with Incfile and get professional support and consultations, friendly and helpful service and additional peace of mind that comes from working with people who are experienced with company formation.