When forming a limited liability company, you need to think though the process and what your goals are with the business before you actually begin the formation process for your new company. “Start with the end in mind” is how I like to say it. Why should you think through the process first?
1 – SELL. If you want to sell your business after a few years you will need to have it structured as a separate entity because no one wants to buy you as a person but rather your business. You will eventually build systems that allows your business to run without you in it. It truly will be a separate entity which is your goal.
2- ASSET PROTECTION. If you are going to try and protect your assets with this new entity, you’ll have to do it uniquely. If you want to hide or protect your privacy, then you will want to structure the LLC in a way that accomplishes that goal and offers you protection. This would be a good time to consult with an attorney.
3 – BUSINESS CREDIT. If you are trying to build business credit on your new entity, then you will want to consult with a credit expert when forming your entity because there is a special way to form it.
4 – TAXES. If your purpose for forming your entity is to save on taxes, then you should meet with your Certified Public Accountant (CPA) and get his/her advise before filing your entity.
This may sound like simple advice but it’s easier to do things right from the beginning rather than change it after the fact.