JONESY ART ATL just became an LLC!
Updated: May 24, 2020
I don’t usually document in the form of a blog, but thought it might be nice to begin one on the occasion of forming an LLC. Its definitely a milestone to celebrate, especially during these very strange and uncertain times during COVID-19 pandemic. The initial process was pretty simple and I went through a legal service to file documents to the Secretary of State.
To become an LLC, or stay a Sole Proprietor?
I have been running my business now for almost 4 years as a Sole Proprietor and it has worked just fine for me as a one person small business. There is nothing wrong with continuing in this way, but there are many benefits to having an LLC.
Biggest benefit is protection! I have been thinking of taking the leap to LLC for over a year now and most of the delay was fear of the unknown. I pushed past that recently and decided to further commit and invest in my business. As my business grows and I take on larger public projects I felt it was important to separate myself from the business (at least in a liability stand point). Having an LLC, even if it is single-member LLC protects me as a home owner. It keeps my personal assets separate from business liability. I still navigate this in similar ways as a sole proprietorship and have options in how I pay myself from business profits, which I’ll talk about more below.
Some things I’ve learned so far
Do your research and take time to plan before applying for LLC. Make sure you know the EXACT name you want to use everywhere. It must stay consistent in all business documentation. I learned the hard way when I realized I accidentally filed without a comma before LLC in my business name like I wanted. I didn’t know it was something I had to decide at time of formation. Not a big deal other than my OCD for punctuation kicks in when I look at it, lol. What you submit and is filed with Secretary of State is your official business name. This includes if you want your business to have a comma, or no comma before LLC. You can choose how it reads after your name: LLC, L.L.C, Ltd. are a few options, but you must always use what you register. Good news about case sensitivity in your business name, it doesn’t matter except for the LLC part. You can literally write it with any combination of case sensitivity, at any time. So my official business name is JONESY ART ATL LLC, but I could write it Jonesy Art Atl LLC or JONESY Art Atl LLC. I cannot however add a comma unless I file something called a DBA (Doing Business As) which costs total of about $300. (Its another option for a less expensive route of a sole proprietor is to only file for DBA, it does not protect your personal assets though....only if it is tied to an LLC) Georgia State filing fees are around $200. I’m sure this varies from state to state. Cost of an LLC also varies depending on how you file. I decided to have LegalZoom prepare and file my documents and initial cost was around $750. (that’s with a rush fee for 10 day turnaround) There are a lot of options in how to structure your LLC, I will mostly talk about single-member LLC. (A member is an owner in an LLC) and the options I chose for my business. If you are a single-member LLC more than likely as the owner your official Certificate of Organization will have your title as Organizer. There must be at least one Organizer in the LLC in order to file documents, even if you appoint someone else to file you may still be listed as Organizer, I am. It is important to get yourself an EIN Tax ID(Employer Identification Number) You will need this to open any business bank accounts, or file for business credit. As a single-member LLC (SMLLC)when filing taxes it will still be on my personal tax filings. It is reported as profit and loss for business under Schedule C. The reason this is done is the IRS considers by default SMLLC to be a disregarded entity, like a sole proprietor for tax purposes.
Please hire a CPA for more details on your tax questions and professional legal advice for other concerns regarding business formation. I’m only describing information I have learned as a small business owner and do not want my findings to be taken as legal advice. Thanks-Jonesy