Benefits of Forming an LLC
When deciding between an LLC and a sole proprietorship, there are a lot of factors to consider, from liability risks to strict regulations. So what’s in it for you? Forming an LLC…
Preparing for the Future: LLC Compliance Requirements
As a business owner, you always need to be looking to the future. Whether you're researching new trends in your industry or trying to learn the latest technology, staying ahead of the game is what separates the good from the great.
But outside of the day-to-day business operations, you’ll also need to maintain compliance with state regulations. This can include periodical reports, additional filing fees as well as annual tax requirements.
You could block out some time reading up on the requirements for your state, but honestly, who has the time? Instead, work with us and take those taxing to-dos off your plate for good (pun intended).
In short: yes, you can form an LLC with just one member.
When forming your LLC remember this mantra: all I need is me, myself and I! This is true from the brainstorming stage all the way to the filing process. While you can always add in more team members as you go, you won’t need anyone but yourself to form an LLC.
You must secure a registered agent and keep them active at all times in order to form an LLC and keep your business in compliance. However, you do have some wiggle room with who that registered agent is, as you can use an internal employee or hire an outside company to act as your company’s representative. And if you work with us, you can get 12 months of registered agent services completely free!
An operating agreement contains details of the financial, legal and managerial rights of all LLC members. This can include how profits are shared, how members may leave the business and who will contribute to the capital for the business.
While you aren’t legally required to have an operating agreement, we highly recommend it. This internal document is crucial to the structure of your business and allows your team to get on the same page in terms of rights and responsibilities. Want to create an operating agreement but don’t know where to start? We’ve got a template for that.
While it often makes the most sense to form your business in your home state, the best states for forming an LLC are Delaware, Nevada, Texas and Florida, due to their business-friendly rules and regulations.
Keep in mind, however, if you choose to form an LLC outside of your home state, you'll likely be required to pay additional Foreign LLC filing fees.
Determining if your business needs an LLC is done on a case-by-case basis. If you're a solopreneur or a freelancer, a sole proprietorship may work for you, but we don't typically recommend them as you won't get the liability protection that an LLC provides.
An LLC is taxed through a “pass-through” taxation method, meaning that the profits and losses will pass to the personal income of the members and owners. Single-member LLCs will be taxed as a sole proprietorship while multiple-member LLCs will be taxed the same as a partnership.
Though these general tax explanations may not apply to everyone, so make sure to speak to an accountant or tax professional to fully understand your personal tax liability.