However, the growing number of new businesses annually prove those intrepid people across the U.S. love a business challenge. According to Statista, the number of new startup businesses in March 2019 that were less than a year old, was 774,725.
Services needed by startups
The legal requirements for getting a terrific business idea off the ground are generally easy and this guide outlines the basic steps.
Choosing a business structure is vital to the business because it offers tax benefits and protects the owners from personal liability. The choice for most startups is either an LLC or a Corporation. LLC owners file their business income into their personal income, and often need to pay self-employment taxes. Corporations are more expensive to maintain, offer the greatest level of personal protection, and file separate income tax on their profits.
Registering the business name
The name chosen for the business must reflect its brand and must be registered with the state and in some states can also include a Doing Business As (DBA). Business owners need to be sure that the name they have chosen is not currently used by another business and they should also claim a domain name for their website.
Getting a federal and state tax number
A federal tax number is also known as the Employer Identification Number (EIN). This is the federal tax identification number for the business and is used by business owners to hire employees, pay federal taxes, apply for business licenses, and to open their business bank account. Tax obligations vary from one state to the other, and every business needs to determine whether a state tax number is required.
Filing with the state
The formation document of an LLC, corporation, partnership, or nonprofits needs to be filed with the state where the business activities will be conducted and where the business will have a physical presence.
Filing with the state is not expensive, and this can usually be done online. The business needs to present its Articles of Organization, a simple document, with all the business information. It should include the business name, location, ownership or management structure, member names, and its choice of a registered agent. Corporations must also include the number and values of their shares.
Creating an operating agreement
Not all states require an official operating agreement, but this legal document should always be drawn up to protect the owners. It should outline the members of the organization, how the company is managed, and how the members vote on various issues.
Capital contributions, profit and loss distributions, and any membership changes should be described in the operating agreement. Finally, the circumstances which would lead to a dissolution should be outlined.
Importance of choosing a registered agent
Here are some of the most common questions asked by business owners about registered agents.
Can you be your own registered agent for an LLC?
Yes, in the U.S. a business owner can act as their own registered agent. They can also elect another member of their LLC, provided the criteria are met. The person must have an address in the state where the business is, must be over the age of 18, and be available on all business days and hours to receive important business documents.
Should I be my own registered agent?
There are many benefits a business owner can reap from using a registered agent service. One of the most important is that they can stay up-to-date with all state and tax reminders and filings. The owners of new startups have many commitments, and one of these is definitely not for them to hang around waiting for important notifications about state requirements or tax reminders.
Registered agent services are there to receive all these notifications, and they remind business owners timeously to meet the payment or filing deadlines. All copies of documents are backed up and business owners avoid having to pay legal fees or penalties if they have misplaced documents or forgotten about their due dates.
If you are still thinking about “can you be your own registered agent”
Besides helping businesses stay compliant with the law, registered agent services offer their owners complete peace of mind and the flexibility to focus on their business. They also provide additional support on various business issues including forming an LLC in more states, and they also help to find state-specific accountants and legal professionals if required.
Finally, business owners are afforded privacy since their address is never listed on the public record. This is especially important if a business owner is ever served with a lawsuit. The papers are served at the offices of the registered agent and there need for the owner to be put in a difficult position in front of staff, family, or customers. Also, all unwanted mail passes through their chosen registered agent’s office. Privacy, flexibility, and peace of mind are the benefits the majority of business owners seek from their registered agents as they concentrate on growing their startups.