Title of Book: LLC Beginners Guide 2024: The Most Complete and Easy-to-follow Handbook on How to Form, Manage and Maintain Your Limited Liability Company (Updated Edition)
I chose to read this book to add to my knowledge about the LLC business entity and the process of incorporating a business. I have prepared my business plan and want to assure I am aware of all aspects of establishing and maintain my company. I know that laws, regulations and procedures are constantly changing so I wanted to make sure I keep up with the requirements.
Introduction – the author explained that he will be helping the readers to better understand the structure of an LLC. Not all businesses will be best structured in this legal form so to understand fully the structure of each entity will help to make the best decision on how to form and create a business.
Chapter 1: LLC’s Explained – LLC stands for Limited Liability Company and its purpose is to provide legal personal protection to its owner, separating the business from their person assets. Taxation is one of the biggest benefits of an LLC because the owner and business are not taxed separately but there are higher rates on the fees so the finances of a business should be considered in forming how to file taxes because in some cases it may be best to file as an S Corp. There are are less laws and requirements when forming an LLC compared to an S Corp and C Corp.
Chapter 2: Is it Right For Your Business? – The structure of a corporation is broke down in this section to help compare with and LLC to understand the best way to establish a business. Corporations have shareholders instead of “members” and ownership is determined by the number of shares held. Corporations have a stricter framework so a board of directors is required to operate. There is a stringent set of rules to follow in the day-today operations of the business as compared to an LLC. Corporations are also taxed on the profits and the owners on dividends causing “double taxation”.
Chapter 3: Starting an LLC – There are seven steps mentions for starting an LLC in this section;
- Choosing a name: Avoid using cheesy, overused names. You want to use a name that will capture the attention of the customer and also tells what the business does.
- Appoint a registered agent: This person will be the one that received legal and financial documents on behalf of the LLC. The owner(s) can appoint themselves or an outside source.
- Obtain the Articles of Organization form: You can find this form on the states authority website or local office.
- Prepare the Articles of Association form: Complete this form answering all questions fully and honestly.
- File Articles of Association form: After obtaining and completing this form you will need to file it in the state the LLC is being incorporated in. There will be a filing fee and once that process is finished a registration certificate will be issued. This document needs to be stored because it is needed for future use in establishing the LLC such as opening a business bank account, obtaining a tax number and possible credit agreements.
- The operating agreement: Not all states require this document but it is beneficial to have. This gives a framework to the operations plan and management.
- Keep your LLC alive: There are annual fees and requirements to keep an LLC operating. These will vary state to state so it is important to learn these requirements and organize a plan to stay up to date on what is needed.
After starting an LLC financing needs to be considered. There are many types of loans a business can consider depending on the needs of the business. A list of these loans include; start-up loans, small business loans, business cash advance, accounts receivable financing, short-term loans, business line credit option, movable equipment financing, commercial mortgage for immovable property and small administration loans. There are also business lending marketplaces to help find what options are available and best suited to your LLC needs.
Chapter 4: Common Pitfalls When Starting an LLC – When operating an LLC you want to be conscious of the possible pitfalls to stay clear of them when operating your LLC. There are six common pitfalls listed that happen often when starting an LLC.
- Choosing the wrong entity
- Choosing the wrong state to register
- Becoming non-complaint
- Forming an LLC without the requisite licenses
- Not getting the correct legal assistance
- Using incorrect documentation
Chapter 5: Converting Your Existing Business into an LLC – Sometimes pre-existing businesses want to convert to an LLC. These reasons vary but at times it is necessary for growth, tax breaks or other legal reasons. There are some entities or types of businesses that cannot form as an LLC. There can be some disadvantages in converting so it is best to understand your options and what pros and cons come with converting.
Chapter 6: Accounting for Your LLC – Bookkeeping is an important part of operating and maintaining a business. A general ledger is how a business records all financial transactions and careful consideration is needed when deciding to either do it personally or hire a professional because one serious mistake can hinder or even end a business. Important finances to record are investment assets, equipment, income and expenditure.
Chapter 7: Filing Taxes as an LLC – In most cases, unless you fully understand what is needed, a professional should be hired to file taxes for the business. As previous chapters have expressed there will be responsibilities the owner will still need to carry out such as keeping track of expenses for non-taxable deductions, and recording assets and the general ledger. These things help to ease the tax filing process. It is important that everything is reported so there are no issues to arise in the future.
Chapter 8: Dissolving an LLC – Dissolving an LLC usually comes from one of two factors. When the purpose of the LLC has been completed or the LLC is no longer financially viable. There is a process to go through to dissolve and it starts with the sole decision of the owner if it is a single member LLC or via vote if it is a multiple member LLC. The final tax return will then need to be filed. All debts will need to be settled even if that involves selling the business assets. Customers and employees should be notified of dissolution as well. In this case personal assets are still protected but it is important not to sign as personal surety for loans or agreements because this negates the limitation of liability.
Chapter 9: Government Contracts – The law requires the U.S. government to allow small business opportunities for growth through ongoing contracts. This helps to keep small businesses from being “muscled out” by large businesses and supports new ideas and economic development that small businesses can provide. There are steps an LLC must take to be eligible for government contracts.
- Obtain a Unique Entity Identifier (UEI)
- Obtain a NAICS (North American Industry Classification System Code) code
- Register the business with SAM (Sam.gov)
- Comply with Public Labor Laws
- Make sure that the cybersecurity system is up-to-date
