Start an LLC

Protect your personal assets and gain credibility with a limited liability company.

Gary J. | Owner, Green Energy Solutions
Incorporated using Rocket Lawyer in 2012

Starting an LLC: Step-by-Step Guide

Looking to form an LLC? We can help you do it quickly and easily, with personalized support every step of the way.

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Business Structure Options

There are four main types of business entities in the United States: sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each has its own pros and cons, so it’s important to choose the right one for your business.

LLC

S corporation

C corporation

Not For Profit Orgs

Sole tradership

Choose the right business structure

Resilient Management

When it comes to structuring, some organizations are more inflexible than others.

Various management structures 

Federal and state legislation defines

Federal and state legislation defines

Stringent management laws

No management staff

Maintenance

Depending on the state and business, compliance regulations differ.

Easy and affordable.

Payroll demands may cause logistical difficulties.

More sophisticated accounting requires.

Most demanding when it comes to tax-exempt status.

No fees and requirements

Limited liability

business owners and shareholders

Protecting members

Protecting Shareholders

Protecting Shareholders

Protecting Directors

Sole proprietors are not shielded from lawsuits.

Good for financing

Some entity types are better, As your vision.

Getting a loan or grant becomes easier

Up to hundred people can be included in one class of stocks distribution.

Can offer an endless number of classes of shares to its shareholders.

Getting a loan or grant becomes easier

More difficulty in acquiring loans and can't give stocks

Tax considerations

Formation fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

tax eligible for deduction.

tax eligible for deduction.

tax eligible for deduction.

tax eligible for deduction.

0 fees

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

LLC members are generally not taxed directly on the profits of the business. Profits from an LLC "pass through" the business to its owners and are reported on the personal tax returns of each LLC member.

That the income and losses from the business are reported on the individual shareholders' tax returns.

taxed separately from their owners, meaning that the income of the corporation is taxed at corporate rates. Profits left in the corporation will be taxed again when paid out as dividends to shareholders.

Nonprofits can acquired 501(c)(3) status and donors' contributions are tax-deductible.

The only tax a sole proprietorship has to pay is on the holder's tax return.

Business structures

Weigh the pros and cons of each entity type to determine which one is ideal for your business.

LLC

Choose the right business structure

Responsibilities

By incorporating, Owners/ shareholders can avoid having to pay for debts or liabilities out of their own pockets.

Protecting members

Resilient Management

When it comes to structuring, some organizations are more inflexible than others

Various management structures 

Good for financing

Some entity types are better, As your vision.

Getting a loan or grant becomes easier

Maintenance

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

Easy to maintain and often most affordable

Tax considerations

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

The kind of business you have set up can affect how much taxes you pay and what forms you need to file

Fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

tax eligible for deduction.

S corporation

Choose the right business structure.

Responsibilities

By incorporating, Owners/ shareholders can avoid having to pay for debts or liabilities out of their own pockets.

Protecting Shareholders

Resilient Management

When it comes to structuring, some organizations are more inflexible than others

Federal and state legislation defines

Good for financing

Some entity types are better, As your vision.

Up to hundred people can be included in one class of stocks distribution.

Maintenance

Depending on the state and business, compliance regulations differ.

Payroll demands may cause logistical difficulties.

Tax considerations

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

That the income and losses from the business are reported on the individual shareholders' tax returns.

Fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

tax eligible for deduction.

C corporation

Choose the right business structure.

Responsibilities

By incorporating, Owners/ shareholders can avoid having to pay for debts or liabilities out of their own pockets.

Protecting Shareholders

Resilient Management

When it comes to structuring, some organizations are more inflexible than others

Federal and state legislation defines

Good for financing

Some entity types are better, As your vision.

Can offer an endless number of classes of shares to its shareholders.

Maintenance

Depending on the state and business, compliance regulations differ.

Payroll demands may cause logistical difficulties.

Tax considerations

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

taxed separately from their owners, meaning that the income of the corporation is taxed at corporate rates. Profits left in the corporation will be taxed again when paid out as dividends to shareholders.

Fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

tax eligible for deduction.

Nonprofit

Choose the right business structure.

Responsibilities

By incorporating, Owners/ shareholders can avoid having to pay for debts or liabilities out of their own pockets.

Protecting Directors

Resilient Management

When it comes to structuring, some organizations are more inflexible than others

Stringent management laws

Good for financing

Some entity types are better, As your vision.

Getting a loan or grant becomes easier

Maintenance

Depending on the state and business, compliance regulations differ.

Most demanding when it comes to tax-exempt status.

Tax considerations

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

Nonprofits can acquired 501(c)(3) status and donors' contributions are tax-deductible.

Fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

tax eligible for deduction.

Sole proprietorship

Choose the right business structure.

Responsibilities

By incorporating, Owners/ shareholders can avoid having to pay for debts or liabilities out of their own pockets.

Sole proprietors are not shielded from lawsuits.

Resilient Management

When it comes to structuring, some organizations are more inflexible than others

No management staff

Good for financing

Some entity types are better, As your vision.

More difficulty in acquiring loans and can't give out stocks

Maintenance

Depending on the state and business, compliance regulations differ.

No fees No requirements

Tax considerations

Tax treatment

The kind of business you have set up can affect how much taxes you pay and what forms you need to file.

The only tax a sole proprietorship has to pay is on the holder's tax return.

Fees

Every legal entity is required to pay government’s filing fees, but as a Law.co’s member, you’re exempt from those charges.

No fees

LLC FAQ

An LLC, or limited liability company, is a business entity that offers the limited liability protection of a corporation while allowing for the flexibility and tax benefits of a partnership. LLCs are formed by filing Articles of Organization with the secretary of state in the state where the LLC will operate.

LLCs can be managed either by their members (known as member-managed LLCs) or by one or more managers (known as manager-managed LLCs). The management structure of an LLC is stated in the Articles of Organization. If no management structure is specified, the LLC will be considered a member-managed LLC.

LLCs are also relatively easy and inexpensive to form and maintain. In most states, the only requirement is to file the Articles of Organization with the secretary of state’s office and pay a filing fee. There are also no ongoing requirements, such as holding annual meetings or preparing corporate minutes, that are required by law.

Articles of organization are the documents filed with a state government to establish a limited liability company (LLC). LLCs are business entities that offer personal liability protection to their owners. The articles of organization establish the LLC’s existence and purpose, as well as the names of its initial members. States have different requirements for what must be included in the certificate of organization, but most states require filing fee and address and name of the LLC’s registered agent.

The articles of organization are also sometimes called the certificate of formation or the articles of association. depending on the state.

An LLC can be formed by one or more individuals, partnerships, corporations, or other LLCs. There is no minimum number of members required to form an LLC, although some states do have minimums if the LLC will be taxed as a partnership.

The cost of forming an LLC depends on the state. Most states charge a filing fee to register your LLC with the state, and this fee is typically around $100. You may also have to pay an annual fee to maintain your LLC status, which is usually around $50. Additionally, you’ll need to purchase LLC insurance, which can cost anywhere from a few hundred to a few thousand dollars depending on the coverage you choose. Overall, the cost of forming and maintaining an LLC is typically around $1,000 per year.

It can take anywhere from a few days to a few weeks to form an LLC, depending on the state in which you are forming your LLC. The first step is to file the Articles of Organization with the state, which can be done online, in person, or by mail. Once the Articles of Organization are filed, you need to pay the filing fee and wait for the state to approve your LLC. Once your LLC is approved, you need to obtain an EIN from the IRS. You can apply for an EIN online, by mail, or by fax. Once you have your EIN, you need to open a business bank account and obtain any necessary licenses. then, you need to file the necessary paperwork with the state to maintain your LLC status.

How long it takes to form, It’s varies from state to state. In some states, such as Delaware, it can take as little as a few days. In other states, such as New York, it can take several weeks.

1. Liability protection: One of the biggest advantages of an LLC is that it shields your personal assets from business debts and liabilities. This means that if your business is sued or incurs debt, your personal assets (like your home, car, or savings account) are protected.

2. Pass-through taxation: LLCs are “pass-through” entities, which means that the business itself is not taxed on its income. Instead, the profits and losses are “passed through” to the owners, who report them on their personal tax returns. This can save you a significant amount of money on taxes.

3. Flexibility: LLCs have much more flexibility than corporations in terms of how they are governed and structured. For example, LLCs can choose to be taxed as a corporation, partnership, or sole proprietorship. This flexibility makes LLCs a good choice for businesses that are still trying to figure out their exact business model.

4. Simplicity: Single member LLCs are much simpler to operate than multiple-member LLCs. There’s only one owner to deal with, which makes decision-making and day-to-day operations a lot easier.

5. Low cost: Forming and maintaining an LLC is relatively inexpensive compared to other business structures. In most states, you can form an LLC online in a matter of minutes, and there’s no requirement to file annual reports or hold shareholder meetings.

 

6. Tax benefits: LLCs can choose to be taxed as a corporation, partnership, or sole proprietorship. This flexibility allows LLCs to take advantage of the best tax status for their particular business. For example, if your LLC has high income but low profitability, you may want to choose to be taxed as a corporation so you can take advantage of the corporate tax rate, which is lower than the individual tax rate.

7. Increased credibility: Forming an LLC can help you gain credibility with customers, suppliers, and investors. An LLC is seen as a more professional and established business than a sole proprietorship or partnership.

8. Ease of formation: LLCs are relatively easy to form compared to other business structures. In most states, you can form an LLC online in a matter of minutes.

“Law.co provides all the legal assistance I need for my family and small business at a fraction of the cost of a law firm. The service and turnaround has been incredible. “

Justin 

Small business and personal client since 2022

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