Do I Need To Be An Llc – Whether you’re just starting your own company or you’ve been in the weeds for a while, it’s important to know which business structure is best for you. There are many options with different pros and cons. Continue reading or go to the infographic to learn more about different frameworks. Contact these llc formation services if you need immediate assistance.
A sole proprietorship is a common business structure. It is taxed as an individual because it is owned by one person, and it is easy to create and regulate. However, the owner has unlimited personal liability, meaning they are responsible for everything. Obtaining long-term capital can also be difficult. Additionally, transferring ownership from a sole proprietor is challenging. This means that it is very likely that the business will die with the owner.
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Do I Need To Be An Llc
A general partnership is similar to a proprietorship. The main difference is that they are owned by two or more partners rather than a sole proprietor. They are still easy to make and have the tax advantage of being taxed as individuals. General partners retain control over the company. Disadvantages are similar to ownership: unlimited liability, difficult to obtain capital, and disorganized (or difficult to transfer ownership).
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A limited partnership, LP, is a special form of partnership. Partners have limited liability, but no control over the firm’s operations. This type of business is popular for risky industries, such as oil drilling, mining, and real estate.
A C-corporation is usually referred to as just a corporation, actually viewed as an individual. They are chartered by the state and believe it or not, they are citizens of the state that created them. Legally speaking, an individual is someone who can sue and be sued, pay taxes separately, and contribute unlimited amounts to political campaigns. A corporation also has all these characteristics, making it technically a person. Advantages of a C-corp include unlimited life, transferability of ownership (via stock), limited liability, and ease of generating large amounts of capital.
Like LPs and partnerships, the S-corporation is a special form of corporation. It is essentially a loophole for small business corporations. They avoid the double taxation that corporations experience by passing their income through to taxation by their owners. However, there may be only a hundred or fewer stockholders who are US citizens or resident aliens.
A limited liability company or LLC is another new special corporation. As with S-Corps, the income is passed through to the owners for tax purposes. Their owners can include foreign entities and shareholders rather than just American citizens. However, the main point is that they have limited liability.
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It is unlikely that limited liability companies will replace S-corporations and partnerships. This type of business structure is attractive because it has a combination of advantages. These benefits include:
As with most things, there are some downsides associated with an LLC. Some of the disadvantages include difficult equity returns, investor oversight, and the need for a new Employee Identification Number (EIN) and related bank accounts. An easy way to manage your workers’ compensation is to consider implementing a return to work program.
Most startups and small businesses can benefit from registering as a limited liability company. If you think an LLC business structure might be right for you and your business, learn more in the infographic below provided by Fundera. The visual also includes a flowchart that can help you decide whether you should form an LLC or consider other options.
Meredith is Editor-in-Chief at Fundera. Specializing in financial advice for small business owners, Meredith is a current and past contributor to Yahoo!, Amex OPEN Forum, Fox Business, SCORE, AllBusiness and more.
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Editorial Team. Striving to publish news, insights and interviews focused on technology and more for growing businesses! It’s amazing to me how often business owners ask me about when and how they should use the LLC modifier in their logos, websites, trademarks, business cards. , social media pages and more.
The simple answer is no, you don’t need to include LLC in your LLC logo and other marketing materials.
Before we get into the specific areas where you really need to use these three special characters, let’s talk about why they’re so important in the first place.
LLC stands for “Limited Liability Company”. Each state has its own statutes, i.e. legal rules and regulations, on what names people can choose for their business organization. If you choose to form an LLC as a separate legal entity to protect your personal assets, the first step is to file some paperwork (i.e. articles of organization) with the secretary of state where you live and work. have to do (Assuming you have already completed a proper name and trademark search).
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And the most important thing in that paperwork is the name of your new business. You were probably asked to include the LLC designation after your company name. This often includes the three letters “LLC,” but can also include things like:
The purpose of this search is to identify your business as an LLC in important legal documents, so that people can look up your LLC name at the Secretary of State’s office where the LLC does business. (This is another reason why you should not operate a foreign LLC without registering it in your home state.) This is not necessary when operating as a sole proprietorship because potential clients will already know who they are dealing with and then they hires you
But the important thing to note here is that we are referring to “important legal documents”. Although LLC is part of your business name, it is not required in most marketing collateral and materials.
When you issue any type of legal documents, such as invoices or receipts, it is a good idea to include your legal business name, including LLC.
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Additionally, whenever you enter into a legally binding contract, it should include your full business name, including the LLC.
Some other legal documents that should include your full legal name are tax returns, your letterhead, and other legal records.
Take a minute and think of all the major brands you can. I’m talking Starbucks, McDonald’s, Target, Apple, Tesla, Google, etc.
These are all large corporations and multi-billion dollar companies. They all have shareholders and have filed corporate documents (presumably in Delaware – read this for why forming your LLC in Delaware is not a good idea).
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This is because, first and foremost, it is not necessary. Second, it will only tarnish their brand name and public image.
Most large corporations operate under a “trade name,” which means they are known by their simple trademark without all the complicated legal jargon involved in their formal name.
If you have a complex or non-sensitive legal name, it may be smart to start a “brand” around a simple name that’s easy for people to recognize and one that you can protect using a trademark.
If you operate your business under a trade name, DBA, or fictitious business name, you will likely need to file some paperwork with your secretary of state for the state where you do business.
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The fee to register your business name is usually minimal – $10-$50. Sometimes it’s a one-time payment, in other states you have to file an annual fee (although this is rare).
The bottom line here is that you don’t need to include the three letters LLC in your logo once you finally get around to filing your LLC. (Your marketing team will thank you for this).
If you’ve already registered your business name, you can update that documentation when you file your LLC with the state, but you don’t need to notify your professional logo designer and ask them to update your logo!
At Hawthorn Law®, we’re all about trademarks and brand protection. If you’re a creative entrepreneur trying to build an online brand, investing in a trademark to protect the rights to your business name is one of the smartest things you can do for your business.
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If you are interested in learning more about how we can help you, please feel free to schedule a strategy session so we can create a plan for your online business. If you’re ready to get started with your trademark, click here to schedule a low-cost brand strategy and trademark review session to go over your options! (
(If you’re looking for guidance on starting your business, LLC, or general legal practice and aren’t ready to move forward with trademarks, please schedule a strategy call instead.)
We use cookies to ensure we give you the best experience on our website. If you continue to use this site we will assume you are happy with it.AcceptRejectPrivacy policyAn LLC helps reduce risk, protecting you from personal liability. There are also significant tax and employment benefits.
Whether you want to write a blog, make YouTube videos, stream video games, sell on Shopify, or invest in crypto, having at least a side hustle is one thing.
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