Form an LLC FAQs
Even if you work alone, there are benefits to forming your own LLC. The main benefit is liability protection. Depending on how you file, there may or may not be tax advantages.
Forming an LLC can help protect your personal assets. If your business fails or if you are sued, your business is sued and not you personally. In most cases, unless you put personal assets assigned as collateral, your home, and other assets are protected if your business declares bankruptcy if your business loses a liability case.
You can file taxes as a "disregarded entity" or as a corporation. If you file as a "disregarded entity", then you are liable for pass-through taxes. This means you file your business income with your personal taxes and you will have to pay self-employment taxes. If you file as a corporation, your business files as a business separate from your personal taxes. You'll benefit from discussing with your accountant what option may be best for you.
Using our services, you only pay your state filing fees if you sign up for a new membership ($39.99 per month). Registered agents are discounted by 25 percent. Without a membership, incorporation filing costs $99.99 plus the state fees and registered agents are $149.99.
State filing fees vary greatly from about $100 to as high as $500. You will also likely be charged a state fee annually to keep your business license current.
If your business does not have a physical address in your state (PO boxes are not acceptable substitutions), you may be required to have a registered agent. Registered agents accept official and legal correspondence on behalf of your business. If your state doesn't require you to have a registered agent, and you don't have one, you may run the risk of missing important correspondence that may put your business at jeopardy.
An LLC Operating Agreement outlines how your company operates. The document may or may not be required by the state your business operates in. Even if it is not required, it is still beneficial since it helps you to preemptively solve problems that may arise. It includes basic business information as well as accounting and dissolution information. It lists the members and what contributions are expected of them. Operating Agreements also describe how conflicts should be managed and what happens if a member leaves (by choice or not).
While single-member LLCs do not usually need an Operating Agreement, it is recommended. An Operating Agreement can show how you plan to separate your own expenses from the business, it may help if you are seeking funding, it can be used to appoint someone to run your business while you cannot, insurance companies may ask for it, and it can be used to define rules specific to your business.