This article may contain references to some of our advertising partners. Should you click on these links, we may be compensated. For more about our advertising policies, read our full disclosure statement here.
So, you’ve decided to start your own blog or business. You’ve been working it hardcore, and you may even be making a few stacks from your new gig. If so, it may be time to start your own LLC.
What is an LLC Anyway?
An LLC (short for Limited Liability Company) is a business entity that can be formed in any of the 50 nifty United States. It is neither a corporation nor is it a sole proprietorship/partnership. Instead, you get the best of both worlds by combining the two.
An LLC offers the simplicity and flexibility of starting a sole proprietorship while providing you with the limited liability enjoyed by corporations. In other words, an LLC separates your personal assets from your business assets – protecting them, in theory, if your business was ever to be sued.
Furthermore, owners in the LLC (referred to as “members”) enjoy the same pass-through taxation treatments that partnerships and sole props are given. Thus, business income is only taxed once instead of twice like in a C-Corp. Pretty sweet deal, eh?
Own a Business, Get More Rewards
In addition to the asset protection and pass-through tax benefits that come with an LLC, one of my favorite things about having a business is the fact that it has its own Taxpayer Identification Number (TIN). That may not sound like much to you, but it helps distinguish the business as a separate tax-paying entity. This also means that the business can apply for its own financial accounts, including credit cards.
Like with personal cards, businesses can earn points, miles, and cash back. Just put your business spending on the card, and you’re good to go. Redeem the points for cash back, gift cards, or travel. Use them for yourself or give them to your employees as a perk. We’ve used them to help pay for more than 12 trips to Europe and the Caribbean in just the last 3 years.
How to Form an LLC
Now that we know what an LLC is and how you can earn extra cash back, let’s chat about how to actually form an LLC, shall we? Understand that each state has their own rules regarding the formation of LLCs, thus we’ll cover as much as we can in our limited space. For example, some states allow single-member LLCs while others do not.
Regardless of where you live, forming an LLC is relatively simple. Although you may wish to seek legal counsel in determining if an LLC is the right structure for your business, you don’t have to use a lawyer to create one. All 50 states allow business owners to create their own LLCs. Just follow one of the easy paths below to get started.
Path #1: Forming an LLC on Your Own
If you are a self-starter, don’t mind searching for and completing government forms, and have the time to do it, starting an LLC on your own is a piece of cake. I’ve done it on my own twice, and it was relatively painless. (If you want a little more guidance, skip this section and use the “Super Easy Way” below!) Here’s how:
1) Choose a name for your LLC. – The first thing you need to do is choose the perfect name for your LLC. But, before you run out and print off those “Bubba’s Balloon Barn” business cards, you’ve got to make sure that there is nobody else using the same name. Simply run a trademark check with the U.S. Patent and Trademark Office by clicking here first. You will also want to run a business name search through the Secretary of State’s website in the state in which you reside. As a final precaution, I always like to do a simple Google search on my business names as well.
See also: How to Create a Website in 6 Easy Steps
2) Purchase your website domain name. – Nearly as important as picking your business name is making sure that the web address you want is available for purchase. You wouldn’t build a brick and mortar business in a location where nobody could find you, would you? The same holds true for your virtual real estate. Although many businesses can get started without one, a website may be one of the most important tools that you have to grow your business. I usually buy our domain names at GoDaddy because they are cheap – and you know how stingy I am. Seriously, buy your web address now. You don’t have to put your website up right away, but you need to be sure that you have the web location that you want.
3) File your Articles of Organization. – These are the documents that will make your LLC official. You can go online to the Secretary of State’s office in your state to find and complete these documents. Typically, there will be a section called “Start a Business” (or something similar) displayed fairly prominently on the SOS home page. Most states will allow you to file the forms and pay the fee online. To complete the forms, you will need the official name of the business, address of the business, names and addresses of the owners/members, and the name and address of the “registered agent” (the member or third-party who will file and accept papers on behalf of your new LLC). When you’re done, the SOS will review your application. Once approved, BOOM! You have an LLC!
4) Create an Operating Agreement. – An operating agreement is a document that delineates how the business is to be run. It outlines the structure and purpose of the LLC, names officers for the LLC and explains their duties, and documents the ownership percentage that each member has vested in the company. You can find examples to use as a guide by doing a quick Google search. Or, you can just click here, here, and here.
5) Get a new Employer Idendification Number. – Now that you have a new business, you need to let the IRS know about it…and pay your taxes. Therefore, you should go ahead and apply for the LLC’s very own Employer Identification Number – especially if your LLC has more than one member! Since the IRS does not recognize an LLC as an official tax classification, you will also need to decide whether you want your business to be taxed as an S-Corp, Partnership, or Sole Proprietorship/Disregarded Entity. There are tax advantages and disadvantages to all of them, so be sure to do your due dilligence before deciding. As a special bonus, travel hackers can use this number to apply for business credit cards – thus giving you a whole new way to earn points! Business, points, BOOYAH! How ya like me now?!? Click here to apply for your new EIN.
Path #2: Forming an LLC on Your Own (The Super Easy Way)
Do you feel like you need a little extra guidance and assistance to form your new LLC? Not to fear! There are several online businesses that offer to help you create your new LLC for a fee. Places like LegalZoom can save you time and hassle. All you have to do is complete a simple online questionnaire, and they will complete and file all of the necessary paperwork for you. So, if you want to make LLC formation as easy as possible, click on our LegalZoom affiliate link above to get started.
Starting your own LLC is easy peasy, and it can help protect your personal assets if your business ever gets sued. So, do it yourself or check out LegalZoom to get started today!