After having recently established an LLC to start my new business operations, I know that there is a wealth of information online on how best to start an LLC and the fees associated. Since registering my company in Delaware is still fresh in mind, I want to summarize the processes to help save other people time and frustration.
But first, what is an LLC?
An LLC is a legal business entity that is recognized by our government. As an LLC, the business owner will have certain legal protections, hence the “limited liability”, but certain things still pass through the individual such as earnings, profits, and taxes. That means you will still report any profits or losses on your income taxes. You can have one person owning the entire LLC or several members owning it as well. Because of the legal protection provided from an LLC (in case someone wants to sue you), is is advantageous to start and maintain an LLC.
Why register a business in Delaware?
First off, Delaware provides a lot of tax advantages compared to other states. I can register in Delaware and avoid paying sales tax, to name one example. The only stipulation is that one must have business operations in Delaware or have a registered agent in Delaware. There are many companies that offer this service in case you do not live in Delaware or your company does not have operations in that state. Luckily, I have an online based business and do business in Delaware and already have a registered agent in Delaware so I could proceed to the next step.
You can register an LLC in every state, but Delaware and Nevada are the most popular because of their low or non-existen taxes on corporations.
The initial cost to forming an LLC in Delaware can be as low as $90, by filling out forms with the state. Check out the Official Delaware website for more information corp.delaware.gov. However, due to the technicalities in forming the LLC, using a company that provides services as a Registered Agent would be the headache free route. If you do not want to deal with the hassles of registering your LLC correctly, then I would recommend finding a registered agent to do that for you. Such companies include legalZoom, or Harvard Business Services. Here is a flow chart on the registering process: http://revenue.delaware.gov/services/Business_Tax/Step2_old.shtml In addition to filing with the state of Delaware, you also need to file with the federal government in order to get the federal EIN number for tax identification purposes. Here is the link to apply to get your EIN: irs.gov/business. Examples of forms you would need to fill out in order to completely register your LLC are an Operating Agreement and Articles of Organization. When you are done registering with the state of Delaware, you will receive a temporary business license and later get mailed an official business license.
On Going Maintenance
The annual fees to maintain your LLC is $250. If you are using a Registered Agent, then you will pay an annual fee with them as well. Other than that, it is pretty simple. Other things to consider is to correctly file taxes on behalf of your business.
And that is how Epic Commerce Solutions was started 🙂