Starting a new company can be an incredible experience… incredibly exhausting, exhilarating, hectic and rewarding, all in the course of the business day. You know that though, or you wouldn’t be taking these first steps to make sure your idea becomes the next BIG idea. The process of going to the drawing board to board room involves a lot of details, one of the most important being to protect yourself and your new company. One of the best ways is by forming an LLC or Limited Liability Corporation.
Begin by realizing that you are never too small to have an LLC. This business structure has many benefits, even for a small business or startup. The most well-known benefit of an LLC is the legal protection it gives you and your partners. An LLC essentially turns your company into its own person, even going so far as to give it a separate tax ID number. I’m not saying it’s going to happen, but court rooms wouldn’t be such busy places if some “sweet business deals” didn’t turn into legal predicaments. Having a properly established LLC ensures that your personal assets would not be subject to a lawsuit. Along with legal protection, there are many tax benefits as well, such as the ability to deduct items such as business trips or client entertainment. Also, forming an LLC will prevent you from inadvertently blending your personal and business finances, a practice that can lead to tax implications in the future.
Obtaining an LLC is also relatively simple. The first step is to get a Federal Tax ID Number for the business. Requirements vary state by state, but for information on what South Carolina requires you can visit www.scsos.com.
Above all, it is important to remember, in order to receive all of the benefits of an LLC you must stay compliant. Never co-mingle personal funds with business funds. Don’t register using your “Doing Business As” name, and make sure to file any changes to the business in an “Articles of Amendment” to the state, to name a few common errors.
Most importantly, if you have any questions about the process, ask! Most banks and Credit Unions have dedicated teams to work with businesses to help them through processes like this.
Good Luck Start-Ups!
Business Relationship Manager
South Carolina Federal Credit Union