In the process of setting up a legal entity for our upcoming business launch, I reached out to several people seeking advice on how best to create our business structure. I’m really grateful for the willingness of everyone to share their knowledge and experience.
This will be the first in a series of posts. Here’s a few things I’ve learned so far…
The K.I.S.S. Method
With all the opinions I was getting from existing business owners, financial managers, tax attorneys, etc., I started to get dragged into the rabbit hole of too much research and no action. After all, we do have a rather aggressive launch date.
Don’t Make It Harder Than It Is
I was hoping that I could just find a simple list, in order, of the steps I needed to take. As you might imagine, this is a difficult thing to do when you start adding in all the specifics of our business needs, state and local laws, taxes (as they relate to digital goods) and the fact that my partner and I reside in different countries.
That said, there are a few steps I’d like to share here in the hope that it will help someone providing WordPress-centric products or services get their business set up and save them some time.
Decide on Your Business Structure
The first thing to do is decide on your business formation structure. There are several choices including Sole Proprietorships, Partnerships, Corporations, S Corporations, and a Limited Liability Company (LLC). See the IRS.gov page which describes the differences between these business types.
We decided to create an LLC and here is the step-by-step list I found that helped us.
Steps to Creating an LLC (in Florida)
[note color=”#8BC53F”]The list below can be found on Nolo.com here. This list is also specific to the State of Florida. To view the steps for other states, have a look at How to Form an LLC. [/note]
1. Choose a Name for Your LLC
Under Florida law, an LLC name must contain the words “Limited Company” or “Limited Liability Company,” or the abbreviations “L.C.” or “L.L.C.” The word “Limited” can be shortened to “Ltd.” and “Company” may be abbreviated as “Co.”
Your LLC’s name must be recognizably different from the names of other business entities already on file with the Florida Division of Corporations. Names may be checked for availability by searching the Division of Corporations business name database. You may not reserve a name before organizing your LLC.
2. File Articles of Organization
A Florida LLC is created by filing Articles of Organization with the Florida Division of Corporations.
The articles must include: the LLC’s name and address; the name, address, and signature of the LLC’s registered agent; the names and addresses of the LLC’s managers; the effective date of the LLC (if other than date of filing).
The filing fee is $125. The articles may be filed online or by mail.
3. Appoint a Registered Agent
Every Florida LLC must have an agent for service of process in the state. This is an individual or business entity that agrees to accept legal papers on the LLC’s behalf if it is sued. A registered agent may be either an individual resident or business entity that is authorized to do business in Florida. The registered agent must have a physical street address in Florida.
4. Prepare an Operating Agreement
An LLC operating agreement is not required in Florida, but is highly advisable. For help creating an LLC operating agreement, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo) or use Nolo’s Online LLC. If an operating agreement is created, it need not be filed with the Articles of Organization.
5. Publication Requirements
6. Comply With Other Tax and Regulatory Requirements
Additional tax and regulatory requirements may apply to your LLC. These may include:
EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN), even if it has no employees. If you form a one-member LLC, you must obtain an EIN for it only if you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Business Licenses: Depending on its type of business and where it is located, your LLC may need to obtain other local and state business licenses.
7. File Annual Reports
All Florida LLCs must file an Annual Report yearly to maintain “active” status. The first report is due in the year following formation. The report must be filed online at www.sunbiz.org between January 1st and May 1st. The fee for the annual report is $138.75. After May 1st, a $400 late fee is added to the annual report filing fee. “Annual Report Reminder Notices” are sent to the LLC’s email address you provide when you submit this document for filing.
8. Foreign LLCs Doing Business in Florida
All LLCs organized outside of Florida must register with the Florida Secretary of State to do business in Florida. Foreign LLCs must appoint a registered agent for service of process physically located in Florida. To register, file an Application By Foreign Limited Liability Company For Authorization To Transact Business In Florida with the Florida Department of State Division of Corporations. The completed application must be accompanied by a Certificate of Existence from the foreign LLC’s home state, dated no more than 90 days prior to the filing of the certificate.
The filing fee is $125.
Before filing, make sure the LLC’s name is available in Florida by checking the Florida Division of Corporations business name database. If the name is not available, the foreign LLC must adopt an alternate name for use in Florida and submit a signed copy of the consent or resolution of its managers or managing members adopting the alternate name.
There are several other steps involved in creating and launching our business, and I’ll be writing about those in the coming weeks. If you’d like to stay tuned, please use the email subscription form on the upper right of this page.
Subscribe to the Succeed with WP Newsletter
Join the SucceedWithWP.com mailing list to receive the latest content from my WordPress business tutorial series.