When you are setting up a business, one of the first things you need to decide upon is what legal structure your company will have. There are many to choose from, and they each have their own advantages and disadvantages. But one of the most popular has to be the LLC, or limited liability company.
One of the major benefits of the LLC is clued in by the name: the individuals involved will have a reduced liability compared to other types of business owners and directors. It also helps to avoid overpaying on tax compared to some other types.
As you can see, there are a lot of good reasons to consider setting up your business as an LLC. But how can you make sure you are doing it right? As it happens, there are a lot of things that you might want to be aware of throughout this process, and in this article, we are going to take a look at some of the most important of these.
The Challenges Of Setting Up An LLC
First, let’s look at some of the major challenges of setting up an LLC. One of the early issues that can arise here is in naming the business. The name needs to be distinguishable from all other LLCs, which includes those around the world, not just in the area or country that you are located in.
Beyond that, the name has to avoid specific words that are prohibited by law. There are lots of these, and they include ‘bank’ and ‘trustee’. You’ll also need to make sure you are not treading on the toes of another company’s trademark, which you achieve by setting up a trademark yourself.
It’s not just about the name, however. You also need to be wary of a number of other challenges. There are significant setup costs when you are creating an LLC, for instance. There are also a number of ongoing, yearly costs that you have to be aware of.
As you can see, there are challenges that you will need to be aware of, as these might influence whether you approach things in this way at all, or go in a completely different direction altogether.
Rules To Enhance The LLC Setting
There are many rules that you need to follow when you are setting up an LLC, and in a manner of speaking we have already looked at some of them in terms of the challenges they pose. For example, there are the rules around naming the LLC. You also need to have set up specific registered agents for the company: someone who receives and serves legal papers on behalf of the LLC.
You also need to make sure that you are filing articles of organisation with the secretary of state, as a failure to do so could land you in a lot of trouble. Bear in mind that there is a fee that you need to pay for this too, although it should not usually be too high. Then you need to publish a public notice of incorporation, and obtain any specific permits and licenses that might be required.
Finally, ensure that you are following all employment laws – if you are employing anyone, that is. By adhering to these rules, you can ensure that you are working within the law and are therefore more likely to get a lot out of the LLC setting and avoid landing yourself in serious trouble.
Use A Hierarchy Of Rules To Initiate Effective LLC Establishment
There are those laws and rules that you need to pay attention to as listed above. These should be the most important rules that you are considering, right at the top of your hierarchy of rules to follow. As long as they are dealt with, you are safe to continue on and to do whatever it is that you are hoping to do with your LLC.
Below those essential rules, you might want to come up with some of your own rules for establishing the LLC, to ensure that you can make the most of it and get started in the best possible way. That might include having rules around which director or partner does what tasks, and how many people you are going to hire. You might also want to set up rules about budgeting and other early factors that can prove very important for any business.
As long as you work according to those rules, you should find that setting up your LLC is a lot easier and more likely to bring success.