An LLC (Limited Liability Company) is a form of organizing a business such that the debts and liabilities of the business do not pass through to the individual(s) or entities that own and run it. It has versatility in the way that it is taxed to fit most small business structures, and is the preferred choice of most small business owners.
Your child’s lemonade stand may (or may not) be free of the worries of debt and litigation, but if you plan to do any significant business, then you probably need an LLC or some other form of registered structure to protect your personal assets from the liabilities of the company. If you are still not sure, consult an attorney or accountant.
This depends on your situation. If your business will operate under the name of your LLC, that satisfies the requirement from the bank (although many banks also require an EIN or Federal Tax ID).
If however, you operate under a different business name than your LLC, you will need a DBA (or Trade Name as it is called in Colorado) to transact business under that name.
Example: You file your LLC for “Vicky’s Baked Goods, LLC” and that is the name of your store and your bank account. The Articles of Organization (LLC filing paperwork) take the place of a trade name/DBA.
If however, you want to operate the business as “Baked Delights”, you would need a DBA.
A tax ID is often required for business reasons beyond filing with the IRS. Vendor accounts, bank accounts, and many other transaction types require a tax ID of the parties involved. Without an EIN, that ID will be your Social Security Number.
Having a Federal Tax ID for the business allows you to transact business in all the same ways without using your SSN directly, but rather the EIN.
There are a number of ways to file your paperwork. You can go to the Secretary of State’s office, fill out the paperwork, pay the filing fee and wait for processing. Many states also allow forms to be mailed, but some do not. Most states allow online filing making a streamlined service like New Business Filing available to save you time.
An LLC is an actual business entity that is formed in order to protect its owners (known as members) from personal liability from the operation of the business. A DBA, often referred to as a trade name or fictitious name, is nothing more than an alias used by an individual/sole proprietor an LLC or a corporation. A trade name offers no protection, has no tax implications, but is linked to the operations of the person or entity using it for identification and other purposes.
All formal business entities, including LLCs, are required to have a Registered Agent on file with the state at all times. The agent may be an individual or company with a physical address located in the state of incorporation. Agents must be available at all times during standard business hours (9 a.m. – 5 p.m. Monday – Friday). The role of a Registered Agent is to receive any and all of communications from the government to the business. The agent’s name and address must be disclosed as part of the company’s public record.
You don’t generally need an attorney to start a business. Especially if the filing can be handled by a service like New Business Filing to help you streamline the formation process, and save you a great deal of time, effort, and money. If your business is complex or you can’t decide on a structure based on general information found on our site or have specific tax questions, we would recommend you speak with an attorney or accountant.
Different states have different fees for LLC and other filings. LLC fees in Colorado are $50. Using a streamlined service like NBF for only $49 can take all the hassle out of your filing. Our goal is to save you time and file the correct documents so you can get started on operating your business, rather than filing it.
Your company name cannot be the same as, nor deceptively similar to any other business name. Your name cannot be intentionally misleading about the services you offer. Most states require an identifier or more commonly a signifier that says the business is an LLC. States differ, but these signifiers are commonly LLC, L.L.C., Limited Liability Co. Etc. Hopefully, you’ll be using this name for a long time, so put some thought into it and choose something that both serves the business and that you like!
If you have questions about name availability, contact us!
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LLCs are typically taxed like sole proprietorships or general partnerships on what is called “pass-through” taxation. This means the owners’ personal tax returns will reflect the profit and loss of the company, that those profits are “passed through” to the individual. Alternatively, LLCs may elect to be taxed as S corporations to potentially reduce the self-employment taxes imposed on the owners. To address your tax issues, check with an attorney or certified public accountant.
It should also be noted that several states impose an annual renewal fee, ranging from $10 to $800, on LLCs. These “taxes” must be paid in order to keep your business in compliance with the state. Your ability to conduct business may be dependent on these fees, so be sure to have your state or service contact you for due dates and deadlines.
A PLLC is a form of an LLC for professionals. Some states prevent physicians, dentists, lawyers, accountants and other professionals from operating as limited liability companies. There should be no misunderstanding that these types of business cannot shield an individual from malpractice or fiduciary irresponsibility.
That does not mean most states don’t allow those businesses to exist. They just fall under a slightly different category that still allows for the tax versatility of an LLC, and that is the PLLC. If you carry malpractice insurance or have a legal fiduciary responsibility to your clients, you’re likely in need of a PLLC. If you are still not sure, consult an attorney for guidance.