Why & How one can Type an LLC & Evaluate of the 5 Finest LLC Service Corporations

Learning how to form an LLC in any state in the USA has become much easier over time due to governments automating the set up process online.This goes for anyone living in the states or outside the USA.For example, if you know what your’e doing, in the state of Utah, setting up an LLC can all be done online here in as little as 15 minutes. From there the system will auto-generate your articles of organization for your LLC which you’ll need to set up a business bank account.Knowing how to form an LLC does take some time to learn though if you’re new to the process. Many folks are not willing to learn all the ins and outs of how to properly set up an LLC in their given state, or know which state to form their LLC for better tax benefits and protection. This is why many choose the easier path and hire a small business attorney or LLC creation service to do all the legal work.In today’s article we’ll discuss how and why forming an LLC might be the better route for you compared to other business entities. I’ll also share with you the top 5 business creation services you can consider using to form your LLC properly in any given state.Why should you set up an LLC or other business entity?Maybe you have a side hustle. Or maybe a brilliant startup idea. But at some point, you’re probably going to need to consider legally forming a business entity. Doing so will keep your personal assets separate from your business assets.I’m sometimes asked whether or not it’s entirely necessary to form or incorporate a business as a legal entity. The answer is that technically, it’s not.Sole Proprietor vs LLCFor example, you can start selling online with no need to form an LLC because the default business organization in the USA is a classified simply as sole proprietor—and for many people, that’s entirely sufficient to start.A sole proprietor can register a trade name aka DBA – doing business as name. The downfall of running a business as a sole proprietor is your business assets are not separated from your personal. That means you can be personally held liable for debts incurred for the business especiallly in cases of being sued. It’s also difficult to raise capital being a sole proprietor.Try thinking of your business ten years down the road. Or five years. Or even six months from now. What if it’s an overwhelming success? What if you need to hire additional staff? What about your tax liability? Deductible expenses? What if you even find yourself in the position where you can sell your business for a tidy profit? Or what if you get sued?Forming an LLC or entity like an S-Corp or C-Corp doesn’t just help protect your assets from being attacked or seized from other people if you operate your business properly. Your business entity can also lend you some helpful credibility to give you a boost that otherwise wouldn’t be there if only operating as a sole proprietor.But it’s not a decision to be made lightly. You not only need to know the difference between business entities, you need to know which business formations are best for your circumstances and future goals.Why separate business from personal assetsOne of the most common dilemmas for small businesses is how to discern between personal assets and business assets. On the one hand, even a minor investment (such as launching your own eCommerce site) constitutes as a business expense—even if you’re paying out of your own pocket.On the other, it can often be intimidating to think of your venture in terms of a business liability; especially when you’re just starting out. After all, you have more immediate concerns; not least of which is growing your business above simple operating costs.Setting up and forming an LLC can help protect your own personal interests; an absolutely vital necessity in the off chance it suffers a lawsuit or faces an IRS audit. It can mean the difference between claiming personal bankruptcy and business bankruptcy.More importantly, many small businesses who choose to expand into new territories and new industries frequently don’t have the time or inclination to manage their initial startup idea, even when they’re overwhelmingly successful. And at some point, they’ll need to devote their energy towards new challenges.Your LLC or entity allows you the necessary legal and financial protection to smoothly sell your business at a profit down the road without worry or disruption of their day to day operations. And it may just be a position you’ll find yourself in sooner than you think. Just make sure to keep your business accounting clean and organized for a smooth business sale.Think like an entrepreneur by forming an LLCBut separating your personal assets from business expenses isn’t just a question of legal and tax liability. It’s a question of psychology.Even if it’s a part time side job, the only way for you to succeed is to think like a business. And thinking like a business owner requires a certain detachment from your personal life. It’s not enough to merely view your business from the standpoint of breaking even. You’ll need to consider inventory. You’ll need to consider expansion. You’ll need to consider financial management. You’ll need to consider optimization of your profit.And above all, you’ll need to consider your reputation. Using your newly formed LLC or business entity of choice doesn’t just mean being legally recognized as “John Smith Enterprises, LLC.” It gives you credibility. It shows your customers that you take your business seriously enough to register as a legal entity. And that’s the difference between a hobbyist and an entrepreneur; confidence, credibility and authority. It’s not just what your customers want. It’s what they demand.4 major types of business structuresThere are really only four major business entity types you need to consider when forming a business organization:Limited Liability Company (LLC),Limited Partnership (LP),S-CorporationC-Corporation.Virtually every small business will tend to be legally structured as an LLC or an LP for both the sake of convenience as well as the tax advantages. Both are considered “pass through” tax entities, meaning that the business itself is not taxed but an owner’s share in its income is. More importantly, that means taxation is based on the personal profits and loss on your return.Tax status of an LLC vs S-Corp and C-CorpWith an LLC, your tax liability is based on your investment in your company; and if you’re just starting out and using minimal capital to fund your business, your tax liability is going to be equally minimal as well. The difference is significant because LLC’s aren’t taxed by federal laws but instead on a local state level per state law, which can vary pretty dramatically.An LLC provides you far greater operational flexibility compared to Sub-chapter C or S-corporations.You can incorporate as an LLC in any state in the US you choose, regardless of where you’re based—including internationally. Many businesses tend to choose Delaware, Utah, Wyoming or South Dakota, as those states are some of the easiest states to set up an LLC or incorporate in as well as being some of the more tax advantageous states.But there are benefits for domestic companies for registering in their home state, including special tax benefits and grants for small businesses. I would recommend reviewing all options first or speaking with a professional before deciding on Delaware, Utah, Wyoming, South Dakota or any other state before you form an LLC, LP, or S/C Corp.Forming a Partnership – LLP, LP Limited Partnership entityWhile a Limited Partnership (LP) is also primarily subject to state tax law, it’s not very common that a small business will incorporate as a partnership. Forming a limited liability partnership (LLP) or LP generally requires both an owner and investors, the latter of whom are also subject to the same liability as an owner.Even rarer to find (if at all) are small businesses incorporated as an S or C Corporation. Both are subject to a corporate double tax law where both the business is taxed as well as the owner’s shares based on dividends. Not only is the tax rate for S and C corporations significantly higher, incorporating as one serves no real purpose unless you’re being publicly traded.There are nuances in both federal and state tax laws you’ll need to review  prior to incorporating your small business as a legally recognized entity. These can be fairly complex, which is one reason why it’s more convenient to form an LLC.LLCs are subject only to state regulations, which are much more straightforward than federal statutes. But state regulations still differ significantly; and the best way to avoid any costly mistakes when registering your business is to use a business formation service.Review of the 5 best LLC service companies 1. Review of My USA CorporationMyUSACorporation also offers secure online business tools, including domain registration and processing services; however, they’re not as comprehensive as Stripe. Nor are their formation services as extensive as LegalZoom. But they’re moderately priced, secure and can provide you with the tools you’ll need to launch your business, no matter where you’re located.2. Review of My Company WorksMyCompanyWorks has been around since 2001; and while they provide expedited service, annual reporting and a helpful account dashboard, they don’t necessarily provide the additional legal protection you can expect from ZoomLegal. But if what you’re looking for from a business formation service is basic and easy to comprehend, MyCompanyWorks is more than adequate. LLC formation packages start at $79 a year plus additional state fees and are backed by a 100 percent satisfaction guarantee.3. Our Stripe Atlas ReviewOne of the great benefits about Stripe is that they’re an all-in-one toolkit for your business. They don’t just register your business. They also provide you with options for eCommerce delivery, including secure payment and checkout options, financial reporting and support as well as offering discounts from select legal and accounting partners. But they’re not cheap. Their annual protected business registration services can cost $300 annually plus additional fees; and that doesn’t necessarily include their transaction processing software.4. Zen Business ReviewUnlike LegalZoom, the focus of ZenBusiness is strictly on business formation. However, they leverage automation into their registration services; a factor that takes a significant amount of time as well as the margin of error out of the process. The basic business registration package for ZenBusiness starts at $49 per year; but I’d recommend the Pro package, which includes compliance assurance, banking resolution services, agent registration and the automatic assignment of your Employee Identification Number (which will be required for any federal and state tax purposes.)5. Legal Zoom ReviewLegalZoom is probably the most widely used online legal service provider. And for good reason. Not only is it the most recognizable business formation service, it’s one of the most extensive and affordable full scale providers. The initial registration of an LLC can cost as little as $79 plus filing fees, which can also be deducted from your taxes. More importantly, LegalZoom provides additional legal documentation and advice; ensuring your business has full and comprehensive protection throughout all stages of its life cycle.