As technology and resources continue to grow, we have seen increased efficiency in almost every stage of the business forming process. Starting a business can be broken down into the following steps: starting with an idea, researching the industry, write a business plan, planning the finances, choosing the business structure, getting the licenses/permits necessary, acquire an accounting software, and then getting to work! Elements of this process can be tedious and laborious. However, you can now do this, and much more, through services like LegalZoom, MyCorporation, and BizFilings.
Choosing a business structure will affect how much you pay in taxes as well as the amount of paperwork that your business is required to complete. It will also affect your personal liability and how you can fund the company. It is essential to make the right decision for your company’s business structure, so we highly recommend speaking with business experts regarding your current position and the type of company you are planning to start. Here is a basic summary of the three of the most popular business structures:
- Sole Proprietorship: The most common form, where an individual is in control of the business, with greater flexibility of management, fewer legal constraints, and fewer taxes. However, the business owner is personally liable for all debts incurred by the company.
- Corporation: A more complex form of business structure, with certain rights and liabilities beyond those of an individual. This can be formed for profit or non-profit purposes and may yield tax or financial benefits.
- LLC (Limited Liability Company): Formed by 1 or more individuals through a special written agreement. Details regarding the organization of the LLC are laid out in an agreement between the members. An LLC can be applied to any for-profit legal business other than banking or insurance. The formation of an LLC protects all members from liability, and taxes are simplified where the profits and losses are reported and taxes on the owner’s returns.
We will take you through the most straightforward way of forming an LLC using LegalZoom. LegalZoom has a strong reputation for being trustworthy, simplistic resource, and popular service to help you get your business up and running.
- Select the LLC option within LegalZoom’s landing page,
- As pictured below you can enter your intended business and then select which state of formation. LegalZoom will notify you whether or not that name is available within your state.
***Helpful Tip: Make sure that the name you pick to file which corresponds with an available domain name to maintain consistency in your brand.
3. You will then be prompted to mark your current operation status, whether the company is already running, will be soon, or is a goal for the future.
4. Then LegalZoom will ask you what your company does. Be vague… this is just a general category.
5. LegalZoom will then offer you, based on the number of employees and previous LLCs, the Essential Services they think you will need for your company (pictured below on the left). LegalZoom can appoint you a Registered Agent, which is a person or company who agrees to accept legal mail and important documents on behalf of your LLC. While you cannot act as your own Registered Agent, you are able to appoint one that isn’t LegalZoom.
6. LegalZoom will then ask you about Essential Documents, the most basic of which is your LLC Operating Agreement. This document acts as the constitution for your business. An Operating Agreement helps you to create rules that will govern your business, which is especially important when multiple members are involved in the formation of your LLC. There is also an offering that includes an EIN (Employer Identification Number) which is required so that you can file taxes and open a bank account.
7. Once you’ve chosen an Essential Document plan, it is time to pay! Cost options based on turnaround time, but all possibilities include State filing fees. Review your order and purchase it!
Congratulations! You are now a member of your very own LLC. Depending on the turnaround time you selected, LegalZoom sends you all the paperwork and documents you will need to operate within a couple of weeks. LegalZoom has a strong reputation, but there are even more online legal services that are also trusted resources and could save you money when forming a business.
Visit the CUE marketplace of software solutions to find tools that will save you time when running your business. CUE only recommends products we believe will add value to our readers. For some links in this post, CUE may receive an affiliate commission.