Starting a business is an exciting prospect and building legitimacy for potential clients, customers, and investors is an essential part of the process. If you're on the fence about whether to start your business as a sole proprietorship or a limited liability company (LLC) there are some important things to consider. Before deciding on the type of business entity, here are some factors to consider:
What is an LLC?
An LLC is a type of business entity for people who want to reduce their exposure for personal liability in terms of running their business. For example, an LLC can be made up of just one member or several members, and the LLC entity was statutorily created to protect the personal assets of members that properly create and operate the LLC business. It adds a layer of protection and makes running your own business a lot less risky. In order for your LLC to provide these benefits, however, you have to make sure that you cover all your bases and structure the LLC appropriately.
You also have the option to establish an LLC operating agreement to further protect you and your business. Although it's not required for filing in NC, it will help organize how the business will continue to operate by creating rules and outlining the responsibilities of each LLC member, and it adds an additional layer of protection.
Set up the basic infrastructure for your business
You have a great business idea and you want to lock it down before anyone can get to it. In a global economy, it makes sense to jump on an opportunity as soon as we see it, but a business has a lot of hidden startup costs. We usually recommend clients wait to register until they're actually ready to generate an income. Do you have the time and skills necessary to run a business? Do you have the capital to rent a space, buy materials, or prototype and manufacture a product? Investors and lenders understand that every business needs to start somewhere, but in order to get these services, you have to prove that it will generate income.
When you're ready to register your LLC, you will be required to file “Articles of Organization” with the North Carolina Secretary of State, which outline your business's address, business effective date (which may be different from the date of filing), and the names of all members of the LLC, and your registered agent, as a start. The State of North Carolina requires that your registered agent be a person or business with an address in the state of North Carolina.
Understand the Secretary of State fees involved with creating a business
Everyone knows that taxes are inevitable, but did you also know that creating a business has filing and operation fees from the State of North Carolina? Once you are ready to start your LLC, filing with the North Carolina Secretary of State is $125.00. Once your business begins operating and generating income, you will have to continue to pay fees with the North Carolina Secretary of State to maintain the LLC. In addition to filing fees, the North Carolina Secretary of State requires an Annual Fee. The Annual Fee is $200.00, if paid by paper filing, or $203.00, if paid online.
The Annual Fee is paid by April 15th of the year following the creation of your LLC entity. For example, if you register your LLC in December, once April rolls around, you will owe the renewal fee even though your business hasn't been operating for a full year. If you start your business in January, however, you won't have to pay the fee until April of the following year. The exact date you establish your business seems like a minor detail, but it's a very important factor to consider when setting up your business when it comes to fees.
Prospective business owners don't have to feel the pressure of understanding every legal implication of their business to work towards their dream. Our lawyers at https://www.nclegaldocuments.com will review your documents to simplify the filing process and answer questions you may have. Get started by clicking on your choice for LLC creation (NC LLC Package or Articles of Organization (LLC) – NC) on this page or under the header “Documents” on our website, or please give us a call at (704) 492-2588 today.