As a small business owner or entrepreneur, there may come a point when you strongly consider the benefits of creating a limited liability company. As one of the most common business structures, it’s natural to spend some time learning more about what it can do for your company.
If you decide in favor of a limited liability company, the next step is deciding how to formalize your choice. There’s a lot that goes into this, so you don’t want to rush the process or make rash decisions along the way.
Generally speaking, you have two options:
- Do it yourself
- Hire a professional, such as an attorney or tax professional, to manage the process on your behalf
The DIY route has become more popular over the past few years, with many people assuming they can use an online tool to quickly create a limited liability company. In addition to speed, they come to find that this can save them money. It’s a win-win. Except for the fact that it’s also dangerous on many fronts.
For example, if you don’t include the necessary information on both your state and federal forms, it can delay the process. Subsequently, it takes longer to set up a limited liability company, which puts you at risk in the meantime.
Another concern is assuming that filing paperwork with the appropriate state agency and IRS is the only thing you have to do. To get on the right path from the get-go, you should also take this time to create an operating agreement. It may not be something you necessarily need on day one, but it will help guide your business in the future.
When starting any type of business, it’s critical that you make all the right decisions in the early days. Neglecting to do so puts you at risk of potential issues later on.
Creating a limited liability company is one of the best decisions you can make, as it helps protect your personal assets while providing a variety of tax benefits. If you’re interested, make sure you understand the legal process and what’s required of you. This isn’t a time for mistakes.