Small Business Saturday: Setting Up An LLC
- At June 07, 2014
- By Kelly
- In Sewing Business
- 2
Important disclaimer:
Sewing Mamas LLC is not able to provide legal advice and any legal decisions you make should be made after careful research and in consultation with your own attorney and tax adviser. Laws vary from state to state and the best course of action depends your specific circumstances. The information presented herein is provided for informational purposes only.
1) Decide How Many Members Your LLC Will Have
Are you forming this business on your own? (That is okay!) Want your spouse listed as a member? Starting the business with a friend?
2) Choose A Name
- It must be different from other LLCs in your state.
- The name must include LLC, or some other wording to indicate it is an LLC. Your state will have specific rules about this, they may allow LLC, “Limited Company” or some other variation.
- Your state may have other name requirements/restrictions. Make sure to review the filing instructions for more information specific to your state’s requirements.
These are just basic requirements.
For this example, our new business is called Perfect Pigweed LLC.
Once you think you have “the name”, search to see if another business is already using a similar name. Google the name you want to use, check your favorite domain registrar (we use GoDaddy.com, this is our affiliate link) to see if a domain with that name is available, search Facebook, etsy, etc. Check the USPTO for registered trademarks.
A careful search has not turned up other businesses with the Perfect Pigweed name. In fact, it appears no one is selling anything related to pigweed! We have hit upon an untapped market!
3) File Articles of Incorporation (Usually with your Secretary of State).
- This is usually a fairly short document that “creates” your company and includes the business name, operating address, owner(s) name(s) and the like.
- The cost of filing varies by state, and may also differ if you are filing online versus in person or by mail. In Minnesota, for example, it is less expensive to file by mail than it is online.
- As you plan your business, take note of your state’s turnaround times for filings.
Some states process LLC filings very quickly, others take (many) weeks.
4) File An Operating Agreement.
In many states this is not required. However, if you are not a single member LLC (ie, you are forming the company with another person), it is important to take this step, even if your state does not require it.
An operating agreement clearly defines your company’s structure, the percentage of the business owned by each member, allocation of profits (and losses), and so on. Even if your other member is your spouse, putting all these things in writing is a good idea.
5) File An Assumed Name.
- If you will not be using your full business name in your business, you may need to file an assumed name, fictitious name or “doing business as”.
(This is another thing that varies by state.) If you need to do this, it is best to take care of it right away.
Perhaps we decide our business name will look much better on product tags and shop sign without the LLC on the end.
(Oh, so much better!) We file the assumed name forms with the state to operate as Perfect Pigweed, but the official business registration and structure is still an LLC.
6) Get Necessary Licenses And Permits.
- These vary by location and by industry. Check this page on SBA.gov to see what you may need.
- In addition to federal and state licenses and permits, check with your local city clerk and county offices to see if they require a business license for your business or if there are restrictions on home based businesses.
(And check here if you are operating as a sole prop, too, since you would still need the proper licenses and permits for your business.)
7) Announce Your Business’ Formation In The Local Newspaper.
- The necessity of this varies by location as well.
- In addition to the legal announcement (if required), you may check to see if your local paper has a section where they announce or promote new businesses. Sometimes small local papers do this for no charge and it is a great way to get some free publicity in your local community.
Other resources to check out:
SCORE – Mentors, tools and workshops to help small businesses get started
SBA.gov – rules, business plans, taxes, and financing information for your business
Hope this helps you get started!
Kelly