Checklist to help get you started with starting and setting up your LLC
You’ve made it to the final part of our series on how to start and setup an LLC!
If you missed Part-1 of the series, you can find it here: why an LLC is the best business to setup. If you would like to go back and review Part-2 of the series, you can find it here: how to start and setup an LLC.
This post will contain a checklist of items you should make sure you cover when starting and setting up your LLC. I’ve also included a downloadable checklist (in Word Document format) that you can download and print-off to help you get started quickly. This will help you ensure you hit all the major bases when setting up your LLC.
Read on to get started!
How to Start an Setup and LLC – Downloadable Checklist
- Download the New LLC Checklist here!!
- If you have not setup your LLC yet, then watch my video on how to start and setup and LLC and click the LegalZoom.com box below!
How to Start and Setup an LLC – Checklist
Naming Plans:
List top-3 names you plan to use here. Make sure a suitable website to go along with the name is available (check www.1and1.com for availability).
Tax Plans:
Select one of the following tax types. See the IRS website here for more info. You will only need to do something (fill out form 8832) if you elect to be taxed as a corporation, otherwise nothing is required.
-
-
- Part of your tax return
- Partnership
- Corporation (Form 8832 will be required, get it here)
-
Early Expenses Planning (First Year):
Use this section to help you plan on how much money you will need to fund your business with.
TOTAL = $
LLC Member Plans:
List out members, % ownership, and initial funding for each member here.
|
Name |
% Ownership |
Initial Funding |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
Other Potential Items to Address:
-
-
- Setup delivery box at UPS Store
- Obtain Employer Identification Number. Get it from the IRS website here.
- Obtain a state tax identification number. Use this Google search, then add your state name to the search to get the proper form.
- Obtain business license / register with County/City Commissioner of Revenue if applicable.
- Register fictitious name with County/City Circuit Court (if applicable)
- Register name and trademark if interested (http://www.uspto.gov/)
- Select bank and fund account
- Setup business checking account
- Setup business credit card
- Setup general ledger for accounting
- Setup Google AdWords account for business website (if marketing on-line)
- Register business website address, deploy website (consider BlueHost.com to host your website. They are awesome!)
- Create Facebook account for business
- Create Twitter account for business
- Setup paper filing system for taxes, expenses, disbursements, invoices, payments, corporate information, etc.
- Create business logo
- Print business cards
- Create simple two-page business plan (who, what, when, where, why, how)
-
If Non-Home Based:
-
-
- Negotiate lease agreement for office space
- Setup phone number
- Setup electricity
- Setup water
- Setup natural gas
- Setup credit card payments
- Setup internet access
-
How to Start and Setup an LLC – Checklist – Summary
In this series on how to start and setup an LLC, we’ve been through a lot. I’ve given you a lot of tools and knowledge that you can put to use to make more money. To summarize, we covered:
Part-1 (Making Money – How to Start and Setup an LLC)
-
-
- What a Limited Liability Company (LLC) is
- Why it is important to have limited liability protection if you are running a business or collecting/receiving money
- Pros and cons of an LLC versus other types of business organizations
-
Part-2 (Start and Setup an LLC on-line in Less than 6 Minutes!)
-
-
- How you can quickly and easily start and setup an LLC in less than 6-minutes with LegalZoom.com
- How you can save $802 when forming your LLC by following my suggestions on reducing the forms that LegalZoom.com will file for you
-
Part-3 (This Post)
-
-
- A word document checklist “New LLC Checklist”, which will help guide you through all the things you need to take care of to properly start and setup your LLC.
-
Let me know if you have any questions, comments, or concerns in the comments section below. I hope you enjoyed this series on how to start and setup an LLC, and I hope you can put it to use to start making money for yourself today!!!
Looks pretty good. I have seriously considered starting an LLC for my woodworking hobby. I would be taking custom job orders on a variety of projects using both traditional techniques and my CNC router (for business signs as an example). One benefit a friend mentioned is all of the TOOLS I have bought, will buy, or receive as a gift could be depreciated on my taxes and thus lower my tax liability. Very appealing since I have inventoried over $10k in tools in my workshop. My concern is to prove to the IRS its not a “hobby” you have to show you’re profitable for 3 of 5 years which, combined with my depreciation, I wouldn’t show profitability…ever. I don’t see enough business to make a good case.
Hmm… As I understand it, the 3-of-5 test is just a simple screening tool to decide if you need to be audited. If you are actually trying to run it as a business vs. a hobby and can demonstrate this, I think you would still be OK.
One other thing to consider that you could depreciate just enough to show profitability in 3 out of the 5 years. This might avoid closer scrutiny if you’re nervous. Also, even if it is a hobby, you are allowed to deduct expenses up to the hobby income.
If you are trying to go the business route, there are other ways you can show the IRS that you’re operating a business (besides the 3-out-of-5 rule) in a FOR PROFIT MOTIVE that include:
See these links for more details. Read up on the third link which shows you the 9 tests the IRS applies to determine if your business is being run with a FOR PROFIT MOTIVE:
-Good luck!!
The depreciation tool would get very tricky at the end of the useful life of my tools. If I only make let’s say $500 in a year with my very small workload, I could only depreciate my tools something much less than that to “show profitability” which means I’m nearly working for free. By the end of 8-10 years when I need a new drill there would still be value left in the tool on paper but not in reality because I depreciated it slower than I should have. At that point I would have to figure out the tax implication. What’s annoying is there is no “law” that says you have to be a good businessman, so the 3-of-5 rule seems lame. My ideal situation would be to reduce my tax liability by using my garage/workshop as a woodworking business and be able to deduct “business related” expenses…especially that new tool I’ve been eyeing. Filling out the monthly state forms would be worth it if I’m saving $1000+ in taxes per year through my “business losses”.
Rob,
Not an expert here, but I think you could probably expense it vs. depreciate it. “As of 2012, the IRS allows you to directly write off expenses up to $139,000, rather than depreciating them over time.” I would call the tools “supplies”.
See here: http://smallbusiness.chron.com/should-expense-depreciate-purchases-assets-business-income-taxes-46561.html
More info from the IRS website: “Section 179 deduction. You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. This deduction is known as the “section 179 deduction.” The maximum amount you can elect to deduct during 2012 is generally $139,000 (higher limits apply to certain property). See IRC 179(e).”
See here: http://www.irs.gov/publications/p334/ch08.html
I believe you are allowed to expense it up to the amount of income earned… So, if you made $1000 in 2014, you could deduct this amount in tools with no issues. If you are trying to buy $10,000 in tools and only showing an income of $500 annually for the long run you will most likely run into problems no matter how you slice it…
With an LLC without any special tax elections, it will be considered pass-through. So, you only have to fill it out with your tax info once a year vs. every month! You can setup your LLC for $100-$200 and save several hundred a year in tax deductions it seems to me…
Thanks for the info, it’s easy to understand.
Can I do all of the above before I get my package from Legal Zoom?
Clyde,
You can in fact perform most of these steps before getting your package from LegalZoom. Some of the steps you will need to wait for will be the EIN, ficticious name, business license, state tax id. These will need to wait until the state corporation commission actually records your LLC on the record. Good luck!!