5 Things You Need To Know Before Filing Your LLC

 

In today’s episode, we will cover what to expect when filing your LLC. A limited liability company protects your personal finances by creating a legally separate entity, but many new entrepreneurs are unknowingly compromising that protection by overlooking these 5 requirements. By following these simple steps, you will ensure your business is compliant and maintain the protection of the corporate veil.

 

Key Takeaways:

[1:40] Choosing the best filing method for you: DIY, 3rd party services or with an Attorney

[3:20] Budgeting for filing fees

[4:40] Appointing a registered agent to receive official mail

[5:50] Avoid piercing the corporate veil by setting up a separate business bank account 

[7:34] Informing your customers of your LLC status before they purchase

 

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Disclaimer: 

The Legalpreneur Podcast is advertising/marketing material. It is not legal advice. Please consult with your attorney on these topics. Copyright Legalpreneur Inc 2022

 

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Legalprenuer transcript:

Andrea Sager  00:03

Welcome to the Legalprenuer podcast. I’m your host Andrea Sager founder and CEO of Legalprenuer Inc. As a serial entrepreneur and someone that works exclusively with small business owners legally protecting their business. I’m dedicated to covering common legal issues faced by business owners, providing you with the business knowledge you need to catapult your business’s growth and showing you just how some of the world’s most elite entrepreneurs have handled these legal and business issues themselves. In true attorney fashion, the information in this episode is not legal advice. This is for informational purposes only and you should always consult with your attorney before implementing any of the information in the show. Hello there and welcome back. Happy New Year. Hope you had beautiful, beautiful holidays, some well needed time off. I had the most beautiful vacation and the most beautiful holidays with my children, my family, everything was just absolutely amazing. But even though I had some amazing and much needed time off, I am so happy to be kicking off 2023 And the first podcast episode of the year. Today we’re going to be covering, of course one of my favorites. And one of the most important topics for business owners is filing an LLC specifically, we are going to be covering the five things you should know before filing an LLC. As a quick reminder, the Legalprenuer book is coming out at the end of this month. I am so excited. It’s been a labor of love and Legalprenuer, the business owners guide to legally protecting your business will finally be in your hands. If you have not already pre ordered your copy, get to it. Now the actual price of the hardcover book will be more than the pre sale price. And if you are getting in on the presale price, you actually get over $2,000 in bonuses. So run, don’t walk, go get the Legalprenuer book right now while it’s still on pre order. So if you don’t already have an LLC, or maybe you do and you’re thinking about filing a new LLC for a different business, or a different revenue stream, these are all things need to make sure you’re considering and make sure you’re aware of these things. So that way you don’t lose your LLC production. So it’s the new year, I know there are many, many people thinking about starting a business, they’re finally starting that business, they’re probably operating as a sole proprietor or DBA. Either way, it doesn’t matter if you’re not an LLC, you should be. I’ve done many episodes on this, but you should be an LLC, but I want to make sure that you’re aware of what you need to know before actually filing the LLC. Okay, number one, one thing you need to know about actually filing is there’s three different ways to get it done. I’m going to run through those. The first way is to DIY, do it yourself, this is going to be the most cost effective option because you don’t have to pay any additional fees, you’re just doing it you’re just putting in the work doing the service yourself. That’s your cheapest option most cost effective. Second Level is working with a third party, this can be Legalprenuer, it can also be a company like Legal Zoom, if you Google cheap LLC filing, it’s all those third parties that come up like ink files and business all of those companies. That is who is actually the third parties. Also, like I said Legalprenuer, just to give you a rate arrange, we charge 250 plus your state filing fees. And that covers the filing your EIN number and all the necessary documents to get you properly up and running. Other companies they have different fees, I can’t tell you what all of them are. But that’s going to be your second option as far as getting the LLC filed. And then the third option is working directly with an attorney. Now if you’re a single member LLC, that means you’re the sole owner or if it’s you and your spouse and the community property state. If you don’t really have questions about filing the LLC, I personally wouldn’t say like, Hey, you should go pay all that money to work directly with an attorney because the third party filing it or do DIY is perfectly fine. However, if you have questions, if there’s more than one owner involved, that’s when I think you definitely should be filing with an attorney because there’s a lot of questions that you probably want a need answered. Now. Number two, you have to pay a filing fee. Now, you heard me say our fees, Legalprenuers fees for filing the LLC 250 plus your filing fees, there’s going to be a fee regardless even if you DIY do it yourself, you are going to have to pay the State filing fee. Some states do have exceptions to this where you can get around it typically it’s for veterans, or sometimes it’s if you’re very, very low income. Every state is different. Some states don’t have them at all. Some states do have them for limited circumstances. So you can definitely check your state if you’re worried about the filing fee, and they vary from $50 to $500 Plus, yeah, I think Massachusetts I want to say is $500.

 

Andrea Sager  05:03

And then of course, in California, we have the franchise tax, which is $800 every year. And that’s not actually the filing fee. But a lot of people think, oh, to file in California, you have to pay $800, you only have to pay $90 Actually to file in California, but the annual fee, there is $800. So don’t get those confused. But no matter what you’re most likely going to have a State filing fee, most likely, you’re not gonna be able to get around it. So number three, you must have a Registered Agent. This is somebody that you appoint to be the appointed person for your official mail. No matter what no matter what state you’re in, every state requires a Registered Agent. Now, it can be you, you don’t have to have a third party be the Registered Agent. For at Legalprenuer, you can pay for us to be registered agent, we charge $150 Every year, and we are responsible for your mail, we send it to you anytime we get something in the mail. And typically it’s not much mail. But if you’re ever to get sued, the Registered Agent is the one that’s actually getting served the lawsuit. It’s not you the business owner, it is the registered agent. So if the government is trying to send you official documents or the IRS, it’s going to your Registered Agent. Again, it can be you you don’t have to use a third party pay a third party, it can absolutely be you. But if you’re somebody that travels a lot, or if you don’t want to be responsible for that mail, then I would definitely pay a third party to be a registered agent. Now, number four, you must have a business bank account. I’m sure you’ve heard of piercing the corporate veil, maybe you haven’t, but piercing the corporate veil, it is a doctrine that basically means Okay, so as an LLC, you have this veil of protection on you. That means that you personally cannot be sued for the debts of your company. And that’s why it’s so important to have this LLC. However, this veil of protection can be pierced. That means if you don’t maintain the requirements of your LLC, and you get sued, the court can say actually, you don’t get this protection because you have not treated it like an LLC. In order to avoid piercing the corporate veil. The number one way it gets pierced is by not having business bank account and by commingling funds. So if you just commingle your personal and business funds, most likely, if you sued, they’re going to be piercing the corporate veil, you don’t want that to happen. So always, always, always is requirement to have a separate business bank account and make sure you are not actually commingling funds, everything is being properly accounted for with an accountant or bookkeeper. Now, I’ve had people ask, Well, can I just have a separate personal bank account? No, you need to have an actual business bank account. Sometimes you don’t have to pay anything for it. Find a local bank, if you don’t want to pay any fees. I know like Chase or capital one bigger banks, they do have a monthly fee a lot of the times, but I am working on finding a good partner. So make sure once you have the LLC, you do have a business bank account. Now, number five, what you need to know before you file the LLC, you do have to provide notice to your customers that you’re an LLC. So a lot of times you’ll find people on social media, they just have their social media handle, they just have their business name, however, go to anybody’s website, it should be if they’re an LLC or corporation at the very bottom in the footer, it’ll say, ABC LLC, or Legalprenuer Inc, that’s what’s at the bottom of the Legalprenuer.com. That is providing notice to your customers or to your clients. Also in your contracts, it has the full business name. And if you have a DBA let’s say your LLC is ABC LLC, but the public views you as XYZ, Your contract should say ABC LLC DBA. XYZ, I know it’s a lot of letters in there. But hopefully you catch my drift. Always give notice to your customer. Sometimes on social media, I’ll see like the handle with LLC in it. You don’t have to do that. Only when they’re purchasing, they have to know who they’re actually purchasing from. That’s why when that you have the terms and conditions on your website, make sure the terms and conditions it says the full business name, including the LLC in it. And the reason is because customers have to make an educated decision of okay, I know they’re an LLC, but I can’t personally go after them Do I still want to purchase from this business? And typically, it’s not something that customers are actively thinking of, but the courts say like this is what has to happen. So always make sure that you are providing notice to your customers somehow that you are an LLC and then they can just say, you know ABC limited or LLC can have the periods you don’t have to if you’re a corporation, you can put Corporation Corp, Inc. Any variation thereof is you have to provide some notice to your customers. Okay, I know we ran through this really quickly, but make sure Are you are aware of these things when you are filing the LLC and even before, make sure you’re maintaining all the requirements of the LLC. If you need help with your LLC filing, just go to the Legalprenuer.com, we can file it for you to 50 plus your state filing fees. If you would like us to be your agent, we can do that as well. You all I am so excited for 2023 there are great things to come for Legalprenuer. And I know there are great things to come for you. I am so happy that you’re listening. And if you’re a continued listener, I’m so happy to have you. I’m so glad that you’ve stayed with us for however long you’ve been listening, and let’s make 2023 the most amazing year ever. shout me out on Instagram screenshot this episode, let me know which one of the five Did you not know about? Or if you knew all of them, shout me out and say thank you so much. I actually knew all of these or I knew nothing. Let me know what was your favorite Which one did surprised you the most? Let me know. I want to celebrate you I want to share you on Instagram, and I will see you next time. Here at Legalprenuer, we’re committed to providing a supportive legal community. For all business owners. I know how scary the legal stuff can be. If you found this information helpful, I would be so grateful if you could share it with a fellow business owner. And quite frankly, it doesn’t cost anything to rate review or subscribe to the show. Your support helps me reach more listeners which allows me to support more business owners in their entrepreneurial journey. Have any questions or comments about the show? Feel free to drop me a line on Instagram. I promise I read all of the messages and comments. And if you want to be a guest on the show or know someone that would make a great guest simply fill out our application form and a team member will reach out if we think it’s a good fit. I’ll see you in the next episode.

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