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In this post you will learn 3 things you must know before starting an LLC.
Whether you are a new entrepreneur or have an established business (but don't yet have an LLC), setting up an LLC should be at the top of your mind when it comes to legal protections for both your business and personal assets.
What is an LLC?
An LLC is short for a limited liability company and is an alternative to the traditional US corporation. LLC's are easier to manage and operate than a corporation, while maintaining the tax benefits that come with a sole proprietorship.
What is at Stake if You Don't Setup Your LLC Properly?
Because setting up an LLC can be complicated and tricky, some people ignore this aspect of legally protecting their business and instead do nothing. The problem with this is that if you don't do anything then you run the risk of getting into more serious legal trouble later on.
Legal issues come in the form of lawsuits, complaints from the FTC, creditor issues, and even potential trademark infringement. When you ignore the legal aspects of running your business, you increase the likelihood that something like this can and will happen.
3 Mistakes People Make when Setting Up an LLC
There are three major mistakes people make when setting up their LLC's. The first is that they get stuck on what to name their business, the second is that they don't hire a registered agent, and the third is that they don't pick the right business address.
Naming Your LLC vs Picking a Brand Name
Picking a name for your LLC is NOT the same as picking a name for your brand. Your brand name (i.e. Trademark) is the name that will be used to identify your business in the eyes of the general public. The name you choose for your LLC is what will go on all of your contracts and behind the scenes documentation.
There is much more at stake when choosing the correct brand name for your business. You must insure your name is not likely to be confused with another brand selling the same products or services that you sell.
On the other hand, the name of your LLC can be anything you want and must not be identical to another name already registered with your secretary of state.
Many people don't understand this and get hung up thinking that they must pick their brand name for their LLC – this is not the case.
Choosing a Registered Agent
A lot of misinformed entrepreneurs believe that a registered agent is some sort of scam to get people to spend money that they don't need to spend.
The truth is that having a registered agent is a smart decision for your business, especially if you do not intend to be available during normal business hours to receive registered mail.
If you are building an online business to serve your lifestyle, then a registered agent is vitally important. They will have an office in your state that can receive mail, legal documents and more while you are working remotely.
👉 To set up a registered agent for your business (FREE for the first year!), click here.
Picking a Virtual Business Address
Your registered agent address is not the same as your virtual business address. You will need a business address for your LLC, and many people just list their home address on the Articles of Organization without really thinking through what this means.
When you file your LLC paperwork, your business address will become public record. For this reason, we recommend using a virtual address or actual office address as your business address.
Some states will even allow you to use a P.O. Box for your business address (note that you may NOT use a P.O. Box for your registered agent address or registered business address).
👉 Click here to learn more about the virtual mail provider I use while working remotely from Europe.
For Additional Legal Help
When you are ready to talk more about how to properly setup your business legally, feel free to click here to schedule a strategy call with me.
When you are ready to start your own LLC, click here.
✅ Need more information on starting a business? Download our cheatsheet here: https://www.hawthornlaw.net/cheatsheet
✅ Want the Ultimate Business Building Checklist? Click here: https://www.hawthornlaw.net/ultimate