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Are you ready to take the leap into business ownership, but wondering “how long does it take to get an LLC?” Many entrepreneurs opt for setting up an LLC due to its liability protection, management flexibility, and tax benefits. In this article, we’ll provide you with a comprehensive guide on LLC protection, its advantages, and the timeline for getting an LLC.
We’ll also be answering other frequently asked questions such as the number of members an LLC can have, whether an LLC can own another, where you can obtain an LLC for free, and the next steps after forming your own LLC.
So, let’s dive in and ensure your business is safeguarded!
What is an LLC?
An LLC is a special type of legal structure for businesses that offers the protection of a corporation, but with the added flexibility and tax perks of a partnership.
The best part? LLCs keep the business and the owners as separate entities, so if there’s ever a lawsuit or legal trouble, your personal assets will stay safe.
Plus, LLCs can have as many members as you want, and the way the business is run is all outlined in an operating agreement that spells out who owns what and who calls the shots.
It’s like having the best of both worlds – protection and control!
Where can I get an LLC?
There are several popular LLC formation services available, each with its own pricing structure and features. Here are some of the most well-known services and their prices:
- ZenBusiness – ZenBusiness offers several packages, starting at $49 (plus state fees) for their basic package. This includes basic LLC formation services and a registered agent for one year.
- Incfile – Incfile offers a free basic LLC formation package (plus state fees), but you’ll need to pay for additional services like registered agent services or an operating agreement. Their other packages start at $149 and include a year of registered agent services and other perks.
- LegalZoom – LegalZoom’s LLC formation packages start at $79 (plus state fees) for their basic package. This includes basic formation services and a 30-day trial of their registered agent service. Their other packages offer more features and services at higher prices.
- Rocket Lawyer – Rocket Lawyer offers LLC formation services starting at $99.99 (plus state fees) for their basic package. This includes basic formation services and a 30-minute consultation with an attorney. They also offer additional legal services for an additional fee.
It’s important to note that these prices can vary depending on the state you’re forming your LLC in and the specific services you choose. You should also carefully review each service’s features and customer reviews before making a decision.
How long does it take to get an LLC?
The time it takes to get an LLC formed can vary from state to state. Here is a general overview of the average processing times for LLC formation in each state based on information from the respective Secretary of State’s offices:
Alabama: 5-7 business days
Alaska: 5-10 business days
Arizona: 3-5 business days
Arkansas: 3-5 business days
California: 7-10 business days
Colorado: 10-15 business days
Connecticut: 7-10 business days
Delaware: 1-2 business days
Florida: 5-7 business days
Georgia: 3-7 business days
Hawaii: 3-5 business days
Idaho: 3-5 business days
Illinois: 10-15 business days
Indiana: 5-7 business days
Iowa: 5-7 business days
Kansas: 3-7 business days
Kentucky: 3-5 business days
Louisiana: 3-5 business days
Maine: 10-15 business days
Maryland: 7-10 business days
Massachusetts: 5-7 business days
Michigan: 5-7 business days
Minnesota: 5-7 business days
Mississippi: 5-7 business days
Missouri: 3-5 business days
Montana: 7-10 business days
Nebraska: 5-7 business days
Nevada: 1-2 business days
New Hampshire: 7-10 business days
New Jersey: 10-15 business days
New Mexico: 7-10 business days
New York: 7-10 business days
North Carolina: 5-7 business days
North Dakota: 3-5 business days
Ohio: 5-7 business days
Oklahoma: 5-7 business days
Oregon: 7-10 business days
Pennsylvania: 7-10 business days
Rhode Island: 5-7 business days
South Carolina: 5-7 business days
South Dakota: 3-5 business days
Tennessee: 5-7 business days
Texas: 3-5 business days
Utah: 3-5 business days
Vermont: 5-7 business days
Virginia: 5-7 business days
Washington: 5-7 business days
West Virginia: 5-7 business days
Wisconsin: 5-7 business days
Wyoming: 1-2 business days
It’s important to note that these are just average processing times, and the actual time it takes to form an LLC can vary depending on various factors such as the complexity of the formation process, the completeness of the application, and the workload of the Secretary of State’s office.
How does an LLC protect you?
The main advantage of an LLC is liability protection. When you form an LLC, the business becomes a separate legal entity from you, meaning that your personal assets are protected in case the business is sued or goes bankrupt.
This means that if someone sues your LLC, they can only go after the business assets, not your personal assets like your home, car, or personal savings.
Here are some of the ways an LLC can protect you:
- Personal Liability Protection: One of the biggest benefits of forming an LLC is that it separates your personal assets from the business. This means that if your business incurs debts or is sued, your personal assets (such as your home or car) are generally protected from seizure.
- Tax Flexibility: Another advantage of forming an LLC is that it offers tax flexibility. By default, an LLC is a pass-through entity, which means that the profits and losses are passed through to the owners’ personal tax returns. However, LLCs can also choose to be taxed as a corporation, which may offer certain tax advantages.
- Credibility: Forming an LLC can also give your business added credibility. By having “LLC” after your business name, it shows potential customers and clients that your business is legitimate and takes itself seriously.
- Limited Compliance: Compared to other business entities, LLCs generally have less compliance requirements. For example, they don’t typically have to hold annual meetings or keep detailed minutes like a corporation would.
- Flexibility in Management: LLCs also offer flexibility in management. They can be managed by the owners (called “members”) themselves, or by a separate manager. This allows for more control over the day-to-day operations of the business.
However, it’s important to note that this protection is not absolute, and there are some situations where you could still be held personally liable, such as if you personally guarantee a business loan or engage in fraudulent behavior.
Do I need an LLC to sell online?
No. You don’t need an LLC to start selling your services online. You can get things up and running as a sole proprietor, which is basically the easiest and most common way to start a business or start a freelance gig.
But if you sell things that could be considered risky, like health supplements or financial guidance, it’s smart to set up an LLC to keep your personal assets safe from any legal action.
Better safe than sorry, right?
Should I start an LLC for my side hustle?
If you have a side hustle that generates income and exposes you to potential liabilities, it may be a good idea to form an LLC to protect your personal assets.
For example, if you’re a freelance graphic designer, you could be held liable if one of your designs infringes on someone’s copyright.
By forming an LLC, you can separate your personal assets from your business assets and limit your personal liability.
Can an LLC own an LLC?
Yes, an LLC can own another LLC. It’s like a big company owning a smaller company. The big company is called the “parent LLC,” and the smaller company is called the “subsidiary LLC.”
The main reason for doing this is to protect the big company from any legal or financial problems that might come up with the smaller company.
By separating the assets and liabilities of the two companies, the big company can keep its own money safe and make sure that its creditors can’t go after the smaller company’s assets.
There are also some tax benefits that come with owning a subsidiary LLC, and it can be a way for a big company to expand into new business areas without taking on too much risk.
So, if you’re thinking big and planning to grow your business, setting up a subsidiary LLC might be just the thing you need!
How many owners can an LLC have?
An LLC can have one or more owners, who are called members. There’s no limit to the number of members an LLC can have, and they can be individuals or other legal entities like corporations or other LLCs.
How many members can an LLC have?
When it comes to how many members you can have in an LLC, the sky’s the limit! That being said, each state has their own set of rules and regulations around LLC membership.
Some states even require LLCs with a certain number of members to file extra paperwork or follow different guidelines.
For example, if you’re in California and you’ve got more than one member in your LLC, you’ll need to file an annual report and pay a minimum of $800 in franchise tax.
But hey, if you’re passionate about your business and willing to put in the work, these small hurdles won’t stop you!
I have an LLC now what?
Now that you have your LLC, there are a few essential steps you’ll need to take. Here are some important actions you should consider taking:
- Get an EIN: An Employer Identification Number or EIN is a unique tax ID number assigned by the IRS. You’ll need an EIN to open a bank account, pay taxes, and hire employees. You can apply for an EIN online for free on the IRS website.
- Draft an Operating Agreement: An Operating Agreement is a legal document that outlines the management structure, ownership percentages, and other rules of your LLC. While it’s not required by law, it’s recommended to have one to clarify expectations and avoid disputes among members.
- Open a Bank Account: To keep your personal and business finances separate, you should open a separate bank account for your LLC. This will help you keep track of income and expenses, and make tax filing easier.
- Register for Taxes: Depending on your business location and industry, you may need to register for state and local taxes. Check with your state’s tax agency to find out the specific requirements for your business.
- Obtain Business Licenses and Permits: Depending on your business type and location, you may need to obtain licenses or permits from your city or state. Check with your local government to find out the specific requirements.
To sum up, creating an LLC can offer your business a variety of perks, such as liability protection.
Even though you don’t necessarily require an LLC to sell online, it’s wise to contemplate forming one if you have a side gig or participate in riskier business ventures.
Gotta protect you, your fam and your money!