Monday, June 8, 2009

Explanation of state filings

I realized I was talking about a lot of things that I wasn’t sure if my readers understood. Let me walk through some of the filings and the explanation of why I filed what I filed:

LLC

A Limited Liability Company provides shelters your personal assets from those owned or controlled by the business. It also offers some anonymity when you are doing business online. I chose Nevada for its strong privacy, no state income tax and fairly pro-business environment. Besides, my next trip to Vegas, maybe I can write off. In addition I am not running a store front but a virtual business so filing one in my home domicile was not required.

Other structures include the typical Corporation, a Sub-Chapter S corporation, Partnerships and sole proprietors. You will have to do the research yourself on the various reasons you might want one but given that mine is a single product, low overhead that I feel I can run myself, and would never need funding, I think the LLC is a good fit for me.

Registered Agent

A registered agent is a company that will take any type of legal service on your behalf. This included any type of lawsuits or subpoenas, as well as documents from the state, such as filing and tax documents. They also remind you of compliance issues and filing dates. It is important to note, if you do not live in the state you are filing in, you will need a registered agent anyway.

EIN/TIN

This is an employer identification number or also known as a tax identification number. It is like a social security number for your company. You need it to open bank accounts, registered with the local taxing authorities, and if you hire employees to pay excise and employment taxes. Even if I didn’t have an LLC, and was a sole proprietor, I would still get once just to keep my SSN off a bunch of public documents.

DBA

Doing Business As. This is a document you file with the state to identify the name of your business. It is also called a fictitious business name in some states. A DBA has several purposes. Once, it allows you to have multiple businesses under one corporate structure:

· Entity: ABC LLC
· DBA: DEF Sales
· DBA: XYZ Services

It also allows you to receive payment into a single bank account under multiple names. Your bank will most likely require it to open a business banking account. It even allows you to make letter head and business cards.

Operating Agreement

This is filed with your LLC to explain how the company will work. I have not received mine yet but will most likely make a few minor changes if I do not like the indemnification provisions. The operating agreement could even include things like ownership changes, splitting of profits and even little things like, year end.

Certificate of good standing

I know little about these. I just know I didn’t need one. Certain states require it but since mine didn’t. If you have a store front and an LLC in your state, just make sure you don’t need one.
Unfiled

There are more documents I need to file, I am just not sure yet. Some of these will be sales tax documents with the states I will accept sales tax in. Others will be a listing of the members and any tax documents I need to think of. I will update you as I figure out which ones they are.

Disclaimer

I am not a lawyer by any means. I am just a small business person sharing my experience. Part of the reason I used the service was, not only for speed, but to make sure things are filed correctly. My whole filing including all the items I listed above was less than 400 dollars, all in. This included the filings as well as state fees and even shipping (pure profit by the way). Don’t let fear of the unknown hold you back.



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