10.20.2021

How to Start an LLC

Written by Kit Jenkin

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When starting a business, there’s no more important decision than choosing the business structure that your organization will take. There are many different kinds of business structures you can choose from, but the LLC remains a favorite among many business owners for its flexibility, versatility, and legal perks. 

If you’re starting your own business, and you’re wanting to start your own LLC, this blog is for you. 

What is an LLC?

An LLC, or limited liability company, is a type of business structure. As opposed to business structures like sole proprietorships where there is no legal distinction between the owner of the company and the company itself, an LLC creates a legal distinction between the person who owns the company and the company itself. 

This legal distinction creates what’s called “limited liability”. In essence, the owners of the business are not liable for the debts and liabilities of the company. If a company were to be sued or become insolvent, the owners’ personal assets can’t be called upon to settle the debt and/or dispute. 

The pros and cons of an LLC

An LLC is perfect for business owners that are looking to take advantage of flow-through taxation and limited liability. Other benefits of an LLC include:

  • LLCs can be taxed in the same way as a sole proprietorship, partnership, or corporation
  • It’s easy to set up an LLC and filing costs are usually very low
  • LLC can be created with one or several owners
  • Flow-through taxation keeps things simple
  •  Members can receive revenues that are larger than their ownership percentage

However, there can be some drawbacks to operating an LLC. These include:

  • Some jurisdictions tax LLC on capital gains
  • There are fewer opportunities for investments since business structures like corporations are seen as more stable. 

Choose a business name

Choosing a business name is one of the most important things you’ll ever do. You want to make sure that your business name is unique, since choosing an existing name can be grounds for trademark infringement. 

Most states have registers of business names that are currently being used. You’ll want to review this register in order to ensure that the name you choose doesn’t already exist.

If your chosen name, or something similar, already exists on the register, you may have to come up with a new business name or get in touch with the original owner to see if you can get permission to use it. 

Oftentimes, companies will use one name for their business and legal filings, and another that they use for advertising and branding. This is known as a “trading name” and it is the name your customers will interact with you as. 

If you’re not yet ready to open your business, you can often reserve a business name for later use. You can make the appropriate arrangements with the government department that handles your local registry. 

File articles of organization

To create your LLC, you need to file your articles of organization with your state’s corporate filing office. Articles of organization may be known under a different name, depending on that state you’re organizing in. For example, states like New Hampshire, New Jersey, and Washington use the term “certificate of formation. In states like Massachusetts and Pennsylvania, the term “certificate of organization is used. 

You can usually file your articles of organization online on your Secretary of State’s website. You’ll usually have to pay a filing fee to submit your articles, which is usually no more than $100.  

Get a registered agent 

A registered agent is required in most states to form an LLC. A registered agent receives legal communications and other documents on behalf of the business. Some small businesses name an owner or employee as the registered agent. But in many cases, a company that provides registered agent services is a better choice [2].

The registered agent must have a physical street address in the state where the LLC is registered. Most states maintain a list of private service companies on their Secretary of State’s website that can act as agents. An LLC member can also act as a registered agent for the LLC.

Determine your management structure

You have the ability to determine your business’ structure. Your company can be member-managed, meaning there is a small number of LLC members who are all involved in the day-to-day running of the company, or manager-managed, where members do not wish to be involved in managerial matters and place that power in the hands of one (or more) managers.

Create an LLC operating agreement

An LLC operating agreement is a legal document that outlines the ownership structure and member roles of your LLC. In many instances, you may not require an operating agreement, but it’s still useful to have everything written down for future reference. An LLC operating agreement will contain:

  • Organization: An outline of when and where the company was created, who the members are, and the ownership structure.
  • Management and voting: How the company is managed and how decisions are made.
  • Capital contributions: Where you designate which members financially support the LLC and form a structure for how more funds will be raised in the future.
  • Distributions: An outline of how the company's profits and losses are shared amongst the members.
  • Dissolution: An outline of the circumstances under which the LLC may be dissolved.

Invest in tech

Limited liability companies are created to give their members the flexibility of a sole proprietorship with the liability protection of a corporation. It’s the best of both worlds. LLCs are great for small businesses that need legal protections but don’t need the hassle of setting up a full corporation. These businesses include organizations like restaurants, cafes, boutiques, and bakeries: exactly the kind of business that needs Epos Now. 

Every business like this needs a secure and efficient way of processing its payments. The best way to do this is with a state-of-the-art POS system

Epos Now offers both dedicated retail and hospitality POS systems that will help you take your business to the next level. 

  • Onboard and train staff in minutes​
  • Seamlessly add eCommerce, Click & Collect or delivery ​
  • Track margin data to identify your most profitable products​
  • Save hours of time with automated, real-time stock counts​
  • Integrate with your preferred payment partner
  • Synchronize your front & back of the house to increase sales and table turnover
  • Integrate with major food delivery apps to win more customers & drive revenue
  • Access your data 24/7 from any device, to make smarter business decisions
  • Drive repeat business and loyalty via CRM & promotions

Contact Epos Now to learn more about our systems.

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