When it comes to running your own business, there are a number of important steps involved. One of the most significant steps in any business owner’s life is setting up their own limited liability company. With the market getting back up from the damage caused by the pandemic, now is the best time to set up your company. An LLC allows you to combine the best features of corporations and partnerships so that your business can kick off the way you want. Not only will you have flexibility within your company if you set it up as an LLC, but you’ll also be able to protect all the stakeholders from legal liability. This sounds like a win-win situation, and it actually is. However, there are a few things that you must know before you set up your company as an LLC.

In this article, we’re going to take a look at some of the things you should do before you even go ahead with establishing the company. These steps will make it easier for you to start operating as soon as possible, and you’ll get a head start over others who might start at the same time. So without further ado, let’s get to it and find out the essentials of setting up a limited liability company.

1. The Name

Even though a rose would still be a rose if you name it something else, your company is not a flower. The name of any company is extremely important due to multiple reasons. First of all, your company’s name will form the identity that’ll help distinguish it from the other competing companies. You don’t want to select a name that’s already been taken up by another organization, as it can lead to legal disputes down the line. You also have to try and make your company’s name as unique as you can. If you choose a name that’s easily forgettable, people aren’t going to recall it whenever they want. This will, in turn, affect your popularity, and a good name equals free marketing.

2. SIC Code

The SIC code, better known as Standard Industrial Classification, is used to identify the exact kind of activity that your company is involved in. It’s usually useful for the government departments that want to check up on your company. Without this code, you can face many legal hurdles in setting up a limited company, and even the Companies House won’t accept your application. So make the SIC code a priority and don’t push it till the very last moment or else you’ll end up delaying everything else as well. You’ll be allowed to pick up the SIC code for your company depending on the activities you undertake and one is usually more than enough for a regular business. However, if your business is delving into multiple different areas, you might need to choose more than one code.

3. Recruitment

The second most important thing in a company other than the company itself is the people there. Your staff and officers will be the ones who’ll carry out the routine tasks that your company needs to complete in order to survive and make profits. You’ll also have to appoint the directors once the Companies House accepts your application and they’ll be responsible for the overall functioning and well-being of your company. Choosing the right people is very important if you want everything to go as planned, and this is why you need to set up certain standards before recruiting. If you fail to match your standards, remember that a lot of companies have been ruined due to poor choices when it comes to the workforce, and you want to avoid that as much as you can.

4. Company’s Address

If you want to register your company, you’ll need a physical address for correspondence and communication. You can’t use a PO box number because the address has to be a genuine one where your officials can be contacted. If your business dealings are international or if your business is online, you need to look into the specificity as there are some specific rules related to these conditions.

5. Explore the Taxation

One of the major reasons why people choose to form an LLC is because of taxation rules. You’ll have varying levels of flexibility when it comes to taxes depending on the number of people owning the company. You have the option of having the company’s profits taxed through the owner’s personal tax returns instead of at the corporate level. It’s in your best interests to explore more about the taxation policies and structures so that you can save the maximum amount of money while not breaking any rules.

6. Operating Agreement

Whether or not you need an operating agreement depends on your local laws and regulations. However, it’s always a good idea to have one and not need it rather than not have one. This agreement will help you protect your business’s limited liability status if it’s ever challenged due to any reason. The operating agreement will be a little challenging, and it’s advisable to ask for help from an experienced attorney. A bulletproof agreement will protect your company from issues you won’t even have a clue about, and it wouldn’t even cost you much if your company already has an attorney on a payroll.

These are some of the most important things one should consider before starting their own limited liability company. An LLC will save you from being liable for anything in the future, however, to make sure that the liability is retained, you’ll have to take all these steps. There are many other things you can do and should know before establishing your LLC. However, all of them can’t be covered in just one article. Moreover, the things that we’ve covered in this article are the most important ones that need to be covered before anything else. If you can properly implement these tips, you can be certain that your company will encounter the least number of issues, if any at all.

By Steve Barker

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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