Creating an LLC for Your Business
Working for yourself is incredible, liberating, and exciting.
It’s also really hard.
As you grow your business and begin to engage with larger entities and clients, more often than not they are going to either require or encourage you to form an LLC. Concurrently, they may require proof of insurance or other business protections -- but a good first step is forming an LLC (even if you are just working for yourself and not really hiring anyone else, more on that below).
Public disclaimer: legal zoom is a racket. Avoid.
You may want to use a professional to handle the Affidavit of Publication (if you do it at all), but otherwise by and large, in about two hours and for around $300 all in (not counting Publication), you can make your own LLC.
I'm not a lawyer, and not qualified to provide advice on the legal pros and cons of forming an LLC, however I do operate three LLC’s and can tell you firsthand - they are great to have!
Another thing to consider, and this one is very timely: It likely makes much more sense to become an LLC for yourself under this new tax plan. More on that in this article here.
One word of warning - you will need to pay unincorporated business tax. It’s not a ton of money, but it is something to keep in mind and save for once your LLC is up and running. You’ll also still get paid on 1099’s, so put a good portion away for the tax man and don't get stuck at the end of the year owing more taxes than you have left.
“Public disclaimer: legal zoom is a racket. Avoid. ”
Enough warnings -- let's get to it. Step by step instructions for setting up an LLC can be found on the State of NY's Division of Corporations' website. But it can get complex, so here are the steps broken down:
- First off, you can't have the same name as any other LLC in the state, so check to see if your desired name is available by searching the corporation and business entity database.
- Fill out and file your company’s Articles of Organization. Form for that can be found here.
- Pay the fee ($200).
- You can then either mail (lame) or file online.
- You will then need an Employee Identification Number (EIN) which is issued by the IRS. Also, pretty straightforward. You can apply for one online here. Remember to choose Sole Proprietorship.
- Obtaining your Affidavit of Publication. This last part is a little wonky, and what I mentioned earlier about potentially using a professional to handle. In NY, there is still this antiquated law where you need to advertise your new company in two separate newspapers for 6 weeks. To do this you mail the County Clerk your LLC filing receipt, then Clerk will assign you two newspapers to contact and get set up. It’ll cost between $600 and $1500 for the advertisements and another $50 on top to file with the state for the certificate. A heads up, but also a fair warning: this is something that could possibly be skipped, but I’m no lawyer and I’m not advising it. This Forbes article explains it nicely.
“Save all of the documents you receive, though they are only super relevant if you get sued.”
Once your LLC gets filed, you will become instantly inundated with solicitations from services that offer to file your Affidavit of Publication for you. It may not be a bad idea to take them up on it…
It’s important to save all of the documents you receive in confirmation of filing each of these steps, though only super relevant if you get sued. Remember that you’re going to need to issue all of your current clients a new W9 and recomplete the vendor process anywhere you are on file. This is a step in the right direction – with the long term goal being a total separation of business and personal (at least as far as $ is concerned).
Now, go get that paper.
Josh Senior is the founder of two award-winning studios in NYC: LEROI (production) and Senior Post (post-production). Josh started Senior Post nearly six years ago, and his longtime clients include Vevo, Facebook, Reebok, Samsung, and VICE. He is also a member of the Hexagon Initiative.