What Do You Need to Form a Single-Member LLC?
So you have a side hustle, and you’re ready to go legit. But where do you start? And how much does it cost?
Trust me, forming an LLC isn’t nearly as hard (or as expensive) as you might think. Follow this step-by-step guide, and you’ll be a bonafide business owner in no time.
1. Choose a name--then search for it everywhere.
The first step to formally registering your business? Deciding what you want to call it.
Picking the right name for your business is a process in and of itself, so give yourself time to brainstorm. Narrow down your top five choices, and make sure the name isn’t already taken.
Start with your state’s business registry system, and see if the name’s available for use. Next, check trademark filings, social media platforms, and existing domain names. Avoid any business names that could infringe on intellectual property or cause confusion for your clients.
Once you’ve settled on a stellar business name, you need to decide where to house your business.
2. Decide on a business address.
There are a couple different ways to approach your business address.
For starters, you need to consider what your business actually needs. An event space, for example, probably shouldn’t operate out of your living room, whereas a home office is perfectly fine for a dropship clothing company.
Particularly for home-based businesses, your personal privacy should be a factor in your decision.
When I started my first virtual business, I did not want my home address used for anything customer-facing. For me, renting a mailbox at a coworking space made the most sense and gave me the most peace of mind.
I still needed to list my home address on formal documents, like my articles of organization. But by having a separate mailing and physical address for my business, I’m able to maintain a veil of privacy (and safety) between my clients and myself.
The key takeaways here are that (1) your business’s mailing and physical addresses don’t have to be the same, and (2) these addresses don’t have to be permanent. As the needs of your business change, your address can, too.
My suggestion? Consult with an attorney, check your local zoning laws, and move within the legal confines of your area to choose a business address that gets you up and running quickly.
3. Appoint a registered agent.
Every business entity should strongly consider having a registered agent. Who serves as that registered agent is up to you.
If you’re unfamiliar with the term, a registered agent is simply a person who agrees to accept official or legal mail on your business’s behalf. This isn’t the person who receives your monthly business credit card statement. This is someone who receives notice of lawsuits or services of process--the big girl paperwork.
You can serve as your own registered agent, or you can hire an attorney. But because registered agents must be available during business and have a physical location, it might be wiser to hire an attorney for this.
Before you pay any attorneys for a registered agent, book several free consultations. Shop around for different prices, and cast a wide net. (The attorney must be licensed to practice law in the state where your business is registered, but they don’t have to be local.)
One I spoke with, for instance, provided a wealth of information during our consultation--but their fees were 3x higher than everyone else’s. Yet another attorney had affordable rates, but their customer service was seriously lacking.
The attorney I ended up hiring has been phenomenal, and I pay just over $100 a year for their registered agent service. Their office is several hours away, but they’re incredibly responsive to phone calls and emails, so the distance isn’t an issue.
Like all things business-related, think strategically here. Even if your state doesn’t require you to have a registered agent (not all do), consider the implications of handling this yourself vs. letting an experienced professional take the helm.
4. Register your business with your state.
And now the moment you’ve been waiting for: officially registering your business entity.
In my humble opinion, this is the simplest step in the process. You literally just need to file a form with your state corporation commission (or secretary of state, depending on the terminology used in your state).
LLC formation fees vary by state, with some charging as little as $50 and others charging $500. Have a debit or credit card ready when you file, as well as the information you gathered in steps 1-3.
Keep in mind that there are annual filing fees, and you’ll still need to set up your business financials. But that’s it. That’s all you need. Forming an LLC is that easy.
Simplifying business is pretty much my specialty. Go ahead and apply for coaching for business strategy tailor-made just for you.