To start an LLC:
- Choose a business name
- Select a registered agent
- File formation documents
- Make an operating agreement
- Get an EIN
- Obtain licenses and permits
Making Money
To make money:
- Define goals and target market
- Formally register the LLC
- Arrange financing
- Market services
- Provide quality and value
Tax and Compliance
- An LLC allows small businesses to limit personal liability. However, taxes and paperwork can be complex.
- LLCs don’t require income. But the IRS may audit if you claim deductions without profits.
- The IRS treats single-member LLCs as sole proprietorships. As the sole owner profits or losses must be reported on your personal tax return.
- If your net income is zero or negative, you may not owe taxes. But the IRS may still require a tax return.
- States charge fees to initially form an LLC.
- The IRS allows claiming losses for only three out of five years. After that, they may audit an LLC without income to verify it is a legitimate business.
When ending an LLC, the simple structure allows smoothly distributing assets and settling debts.