Business Entity Search For Florida – A limited liability company (LLC) is a popular business structure for small business owners because it is cost-effective, tax-efficient, and expands along with your business operations.
You will need to file the required documents with your local Secretary of State (SOS) to form an LLC.
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The US has 50 states plus the District of Columbia (DC) and a few island territories such as Puerto Rico, the Virgin Islands and Guam.
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You can register your LLC in any of these locations, but starting your LLC where you live and do business is usually the best option for most new business owners.
If you plan to have operations (eg, warehouse, storefront, employees, etc.) in other states, you will need to register your business as a foreign LLC in those states.
Out-of-state registrations mean you will have to comply with laws and regulations in both your home state and your state of registration.
On the bright side, you may be able to lower your tax bill if you incorporate an LLC in a different state.
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Delaware, Nevada, and Wyoming are some of the best states to form an LLC for companies that want to legally limit their tax exposure.
Once you have determined the state of incorporation for your business, you will need to research and choose a legal name for your business. Below is a brief description of the main steps.
No two companies can operate under the same (or similar) brand name. Therefore, you should check whether your chosen business name is available for registration.
Note: Since your LLC name should appear on customer-facing assets (your website, your receipts, etc.), aim for an easy-to-remember, branded name.
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Research LLC name requirements in your state. Most require terms such as “LLC” or “limited liability company” to be included in the company name.
Also, many states do not allow words such as “corporation” or “incorporated” to be included in an LLC name, as this can create confusion. You should also avoid words that can be misleading.
For example, you can’t name your LLC “IRS, LLC” because it could be confused with the Internal Revenue Service.
Similarly, you are often not allowed to use wording that suggests you belong to certain types of entities, e.g. “bank” or “trusts” unless you operate as one.
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For example, to use words like “Doctor” or “Lawyer” in the company name, you may need to have a licensed person among the members of your LLC.
If you have a business name available in your state but are not ready to file your LLC paperwork, most will allow you to hold a name for a period of 60 to 120 days on average.
To obtain a name reservation for an LLC, you will need to fill out a corresponding form and pay a state fee.
Given that over 4.4 million new businesses were registered in the US last year, reserving a name makes a lot of sense.
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DBA is short for ‘do business as’. Also called a trade, assumed or fictitious name, this document allows you to use another name for your business.
A DBA is a way to brand your business, but it doesn’t offer legal protection to your personal assets.
Therefore, if you are a sole proprietor registering your trademark in your state, you are still legally a sole proprietor. Your legal business name does not change.
Forming an LLC provides the personal liability protection you won’t get as a sole proprietor operating under a fictitious name.
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A registered agent, also known as a legal agent or permanent agent, is a person or business appointed to receive service or other official mail and legal documents on behalf of your company.
Anyone who meets your state’s requirements can act as your registered agent. Generally, there is a minimum age requirement (18+ years).
Also, the agent must be available during regular business hours at a physical location at an address in the state in which you are registered.
Using a registered agent service will cost you up to a few hundred dollars a year. But appointing the business owner or an employee will not cost anything extra.
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Some states (eg Florida) charge a fee to change registered agents. But the initial appointment of an agent is generally grouped under the state filing fee for the Articles of Association.
It is the most common management structure, as most LLCs are small businesses and do not need a separate “layer” of oversight (a board or a managing director). Plus, most people don’t have the money for it.
Manager-managed LLCs can delegate some of the member’s responsibility to another LLC member or to a non-member, for example a hired professional manager.
It is common in LLCs, where some members prefer to be passive investors and not actively participate in the running of the business.
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Now that you’ve decided on your company name, registered agent, and management structure for your LLC, it’s time to officially form your company.
Each state requires you to file Articles of Incorporation, also referred to as a Certificate of Incorporation or Certificate of Organization, with the Secretary of State (or an equivalent government agency) as the primary step of forming a corporation.
LLC formation times vary by state. Those who accept digital filings can approve your Articles of Organization within several days.
Mail and in-person submissions can take up to several weeks. Many states offer expedited processing (1 day to 2 hours) for an additional fee.
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Only some states legally require LLCs to have an operating agreement. However, if you are registering an LLC in another state, it is a good idea to have.
The operating agreement sets forth the financial and management rights and responsibilities of the LLC members. It addresses issues such as:
Having an operating agreement is crucial for multi-member LLCs, as it establishes ownership percentages and can help avoid disputes between members.
Without an agreement, your LLC will be governed by your state’s default rules and laws. And this can lead to unwanted consequences.
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LLCs based in California, Delaware, Maine, Missouri, Nebraska, and New York are legally required to have an operating agreement.
The dreaded part of running a business is paying taxes. You should consider how both federal and state taxes will affect your company.
By default, all single-member LLCs are taxed as a sole proprietorship. LLCs with more than one member are taxed as general partnerships.
This means the company pays no federal income tax. All corporate profits are “passed through” to members and will be taxed on the individual’s tax return.
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By electing to have your LLC taxed as an S-corp, which is short for “small corporation,” you can receive certain tax benefits.
This is because all corporate profits from sole proprietorships or partnerships are subject to the 15.3% self-employment tax and personal income tax rate.
In contrast, business income from an S-corp is not subject to self-employment tax. Instead, you will pay taxes on earnings distributed as salary and then a corresponding personal income tax rate. Taking this route can be a more economical option in some cases, especially if you don’t plan on cashing out all the winnings.
However, S-corp taxation may not work for every type of business. Be sure to check with your tax professional about whether it is appropriate for your LLC.
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You can also choose to have your LLC taxed as a C-corporation or large corporation. This tax classification is best for companies that expect to grow and have more than 100 investors, which is the limit for S-corps.
The downside to being taxed as a C-corp is that you will be taxed twice because the tax is charged at the corporate level and again at the individual shareholder level.
To report federal taxes, you will need to obtain a Federal Employer Identification Number (FEIN) from the IRS as an LLC. This number will act as a social security number for your business and is necessary for opening a business bank account.
It costs nothing to get one, you can apply online and your EIN will be issued as soon as you complete the application.
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Franchise taxes are also known as privilege taxes and are imposed by some states on businesses that operate within borders.
Contrary to what the name might imply, there is no franchise tax imposed on a franchise. Regardless of their line of business, all eligible legal entities must pay it for the right to exist and do business in a particular state.
States that charge franchise taxes (or a variation): Alabama, Arkansas, California, Connecticut, Delaware, Washington DC, North Carolina, Rhode Island, Tennessee, Texas, and Washington.
If your business sells taxable goods or services, you will need to collect sales tax from your customers and remit that tax to the state.
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To collect and remit state and local sales taxes, you must register with a local tax authority and sometimes obtain a sales business license.
Most states have a corporate income tax that is charged on the company’s profits. But unlike most federal income taxes, this tax is paid by the LLC.
And some states tax your company’s revenue, not its net income. These types of taxes are commonly called gross receipts taxes.
Check with your state and local government offices to determine if your type of business requires a permit.
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Yes, especially for the liability protection LLC owners receive. When you set up your business as an LLC, your personal assets are protected in case your business falls on hard times. LLC owners also enjoy pass-through taxation and face less administrative red tape than corporations.
The main disadvantage to forming an LLC is
