Choosing a good LLC name can be challenging, but it’s essential to do it right. Your business name must be unique and distinguishable from other LLCs in your state.
This means that it can’t be the same as another business entity or a trademarked phrase. It also means that you must choose a name that’s relevant to your business and doesn’t confuse potential customers.
Limited liability
When naming your business, it’s important to choose a name that not only represents the products and services you offer but also complies with state law. For example, a party planner may want to use a name that evokes fun, while a funeral home owner might prefer something more serious.
In addition, your company name must not be the same as any other LLC or corporation registered in your state or conflict with another business’s legal name. Most states have searchable databases that you can use to find out if your name is already in use by someone else.
Many entrepreneurs opt for names that are memorable, combining words that make sense together or using alliteration or puns to convey their business’s mission. Choosing a name that is memorable will help potential customers and clients remember your business when they need the services you provide or the products you sell.
Taxes
An LLC is taxed differently than a C corporation, allowing owners to deduct their share of company profits and losses on their personal income taxes. However, if the owners hire employees they must pay federal employment and social security taxes.
In addition to federal income tax, some states also impose state income tax on limited liability companies. This is typically called corporate activity tax or franchise tax, and can be an additional burden on small businesses.
Depending on the state, an LLC can also be subject to other taxes, including registration fees and a naming requirement. LLC Name rules vary from state to state and often require that your name not include words or abbreviations that falsely suggest a bank, insurance company or another type of business that your LLC is not.
To make your new business official, you’ll need to file a certificate of formation with your secretary of state or another department that handles filings in your state. This document serves as a legal proof that your business is a valid entity and can be used to open a bank account, obtain an EIN and so on.
Operating agreement
An LLC operating agreement outlines the rules of a limited liability company. It spells out how the LLC will be operated, how profits and losses will be distributed, and how members will be compensated.
The owners of a business should also consider the use of an operating agreement as a way to protect their personal assets from creditors. This will be important in the event of a lawsuit or other legal dispute.
The ownership section of your LLC operating agreement should outline the name, address, and percentage interest owned by each member. It should also describe the voting rights of each member. It may also include buy-out provisions, a provision that deals with the death of a member, and other terms.
Members
The members of an llc are the people who own the company. Like shareholders or partners, LLC members can take a number of different titles.
Depending on the size and structure of an organization, a member might be a managing partner or a passive investor. A passive member doesn’t have a vote in decisions that require a full vote of the LLC members, but they do report their share of profits as passive income and don’t pay employment taxes on it.
In a manager-managed LLC, members elect designated managers to run the day-to-day activities of the business. These managers are usually paid executives who have experience in the type of business operated by the LLC.
In a manager-managed LLC, the managers have a duty of loyalty to the members. This means that they must not let their personal interests get in the way of the interests of the members or the business. They also must make sure that they receive approval from disinterested managers and members before completing any transactions that benefit them personally.
