Should I Get A Dba Or Llc

By | March 29, 2023

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Congratulations With much Respect! You’ve filed your articles of organization, appointed a registered agent, paid the required fee, and you’re the proud owner of your limited liability company. !

Should I Get A Dba Or Llc

Should I Get A Dba Or Llc

You can choose an LLC business structure for its taxes and liabilities, but your LLC can’t help you if it’s too weak to withstand scrutiny. In this article, we’ll look at several ways to make sure your LLC is strong enough to provide the protection it’s intended for.

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As a business structure, LLCs are particularly attractive to small companies because they give the legal protection of a corporation with tax advantages to sole owners or partners.

If you are a sole trader or partnership, there is no legal separation between your business and personal property. That means if you’re sued by a customer or can’t pay a creditor, your personal assets—your savings, your retirement account, even your home—can be seized to pay off the debt. An LLC protects your personal assets by limiting business-related liability to only the assets of your business—hence the term “limited liability.”

On the other hand, if your company is a corporation, both your business and the money you pay yourself will be taxed—basically, your profits will be taxed twice. However, unlike corporations, LLCs are not taxed. Instead, the money “passes through” to the owner’s personal tax return (so-called “pass-through tax”), and the owner pays personal income tax.

Taxes and liabilities vary, so it’s worth consulting a tax advisor and/or attorney about your specific situation. It is important to understand that an LLC is a separate legal entity from its owner. Having an LLC is a good start, but maintaining it is equally important. In the event of a bankruptcy, tax audit or lawsuit, for example, you need to be able to prove to a court or the IRS that you are treating your company as an official business and not a personal slush fund.

Dba Vs. Llc For Dummies (explained)

If you can’t prove that your LLC is a real business, you can lose out on many of the benefits it should provide. You’ll also lose those benefits if your LLC dissolves, which can happen if you don’t file your annual report and pay the associated fees.

Fortunately, maintaining an LLC is not difficult. Here are some quick tips to make sure your LLC is in good standing.

Registering your business as an LLC is an important first step in establishing your business – but it’s not the only one. The following steps are not always required by law, so they are sometimes overlooked. However, they are essential to keeping your LLC in good standing.

Should I Get A Dba Or Llc

Even if your LLC is already established, do these things as soon as possible, ideally before you start working with clients or customers. Each of them contributes to the strength of your LLC and will help it face different challenges. Bonus: They’re all good business practices you should be doing anyway.

Dba Vs. Llc: What’s Right For Your Business?

Especially if you’re a sole trader (aka, single member LLC) with a simple business model, like employment or consulting, it can be tempting to keep using your personal bank account for corporate purposes.

But while it’s not technically illegal to mix your personal finances with your LLC, it’s not a good idea.

The whole point of an LLC, after all, is to separate your personal assets from your business. If you combine your personal and business finances together, the court may decide that your LLC is not a separate legal entity. That puts you at risk of losing the liability protection that an LLC pays for—and by extension, putting your personal assets at risk.

A separate bank account also facilitates record keeping and tax compliance. If you are ever audited, a separate and well-maintained business account will save you time and aggravation in dealing with the IRS.

Do You Need To Put Llc In Your Logo?

Fortunately, opening a business account is easy. Most banks and credit unions will let you open as soon as you have a business name and EIN (you can get an EIN from the IRS right away by filing online). Once it’s set up, treat your business bank account like your job depends on it—because it does.

Some, but not all, states require LLCs to have an operating agreement, but whether it’s a requirement or not, it’s a smart move, especially if you’ve gone into business with one or more people.

The operating agreement defines each member’s responsibilities, the assets each person contributes to the business, how ownership is structured, how money will be raised and distributed, what your process is for adding and removing members, and under what circumstances and what your company will do. do. dissolves

Should I Get A Dba Or Llc

Your operating agreement is a legally binding document, so getting a lawyer to help you draft it is a good investment.

Using Limited Liability Corporation Llc With Your Company Name

The exact license and permit requirements you need for your business will vary by region and your industry, but it’s your responsibility to know what you need, make sure you have them and keep them up to date.

You risk losing your LLC status if you don’t have the right license or permit and open yourself up to fines or legal fees – so don’t get started until you’ve got everything you need!

If you’ve formed your LLC but want to do business under a different name, you need to file a “doing business as” (DBA), sometimes called a “fictitious name.”

For example, the owner of Agnes Johnson Media LLC might want to do business as “Blessed Wedding Photography.” However, if she operates her business under that name without registering for a DBA, she risks invalidating her LLC.

Operate Multiple Businesses Under One Llc Holding Company

Fortunately, the DBA registration process is usually simple and inexpensive. The exact requirements vary, but in most cases, you can find out what steps you need to take from the state agency where you registered your LLC. Don’t forget that you will need to renew your DBA regularly (usually every year).

DBAs also allow you to operate more than one business without filing for an entirely new LLC. Assuming she has the right licenses and permissions, for example, Agnes Johnson can create the companies Blissful Wedding Cakes and Blissful Flower Arrangements just by registering multiple DBAs.

In the future, you will need to do regular maintenance to keep your LLC in good condition. These are ongoing tasks that help keep your LLC in good standing and ensure that it doesn’t dissolve from neglect or weaken to the point of being useless.

Should I Get A Dba Or Llc

If you’ve just formed your LLC, you don’t need to file an annual report for at least a year – but now’s the time to make sure it’s on the calendar.

Free Single Member Llc Operating Agreement Template

Most states require LLCs to file an annual report, sometimes called a Statement of Information (SOI). A few states only require an SOI every two years, and if you register in Pennsylvania, you may only need to file once every 10 years.

Annually or not, your report is filed with your Secretary of State. It can usually be done online, but exact costs and filing requirements vary from state to state. Some states send reminders before your report is due, but ultimately, it’s your responsibility to make sure it’s filed. If you miss the deadline, you may have to pay a late fee.

If you’re hiring a company to set up your LLC, check to see if they’ll send you a report (and ask how much they’ll charge) or if you want to do it yourself. Either way, right now, while you’re thinking about it, find out when your next report is due and put the date on your calendar to make sure it’s submitted on time.

It sounds very formal and intimidating, but your annual report is not like a letter to shareholders detailing everything your business did last year. It is only an opportunity to confirm or update the following:

Doing Business As (dba) Your Birth, Former, Or Maiden Name

Again, keeping minutes and other company records is not a legal requirement, but it is a good way to protect yourself.

Remember that in the event of a lawsuit, bankruptcy, or other situation where your company’s assets may be at risk, it’s important to be able to prove that your LLC is a separate legal entity from you personally—ie. That it is a real business. , not just tax loopholes. Regular record keeping strengthens your protection against personal liability in the event of a lawsuit by showing that you treat your company like the business it is.

Detailed, comprehensive financial records also make dealing with taxes easier and will be essential if you ever need a loan for your business.

Should I Get A Dba Or Llc

You should keep copies of the following at your workplace as well as back up to the cloud so you can get your hands on them quickly and easily:

What Is A Dba & When To File One For Your Business

As mentioned above, in the case of most limited companies, the owner, not the company itself, pays the tax.

That said, there are many variables, depending on whether you are a single member or multi-member LLC, how your operating agreement works.

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