Forming a limited liability company (LLC) is an exciting step for any entrepreneur. As the name implies, an LLC protects business owners from personal liability and offers tax benefits that are unavailable in other forms of business. To ensure your LLC is properly formed and protected, it’s important to avoid mistakes during the formation process. With help from ZenBusiness review on LLCGuys, you can easily protect your LLC and maximize its potential.
In this article, we’ll discuss the seven most common mistakes made when forming an LLC, how to avoid them, and what you need to do to get started with a ZenBusiness review from LLCGuys today.
Choosing The Wrong State For Your Business
One of the most common mistakes entrepreneurs make when forming their LLCs is choosing the wrong state for their business. Every state has different regulations and fees associated with creating an LLC as well as different rules governing taxation and operations. Some states may also impose restrictions on foreign investors or require additional paperwork before they will allow businesses to operate within their borders. Before selecting a state for your business, be sure to research all of the regulations applicable in each jurisdiction so you can make an informed decision about where to register your company.
Failing To Get Proper Licenses And Permits
Another mistake that many entrepreneurs make when starting their own businesses is failing to get proper licenses or permits before launching operations. Depending on the nature of your business, you may need special licenses or permits in order to legally operate in certain jurisdictions or engage in certain activities such as selling liquor or firearms. Failing to obtain these licenses can result in hefty fines or even criminal charges if you are found operating without them, so it’s important that you take time before launching operations to make sure that all necessary documents have been obtained prior to starting up shop.
Not Complying With Employee Laws
When running your own business, one of the most important things you must remember is compliance with federal and local laws regarding employees’ rights and obligations under labor law. If you fail to comply with employment laws such as minimum wage requirements or overtime pay regulations, then you could face serious civil penalties that could put your entire business at risk. Make sure that all necessary payroll taxes are being paid correctly as well as ensuring compliance with anti-discrimination laws so that both employers and employees are fully aware of their rights and responsibilities under current labor law statutes while working together harmoniously towards success!
Ignoring Intellectual Property Rights
If your business involves any kind of design work – whether it’s website development, logo creation or product packaging – it’s essential that you understand the issues surrounding intellectual property rights before you start any projects for clients or customers. Even inadvertently infringing someone else’s copyright can cost thousands in damages, depending on the severity of the infringement, so taking steps such as researching existing trademarks/copyrights/patents/etc., registering any unique ideas that may only belong to you & seeking legal advice if necessary should always be considered first before proceeding!
Not having an operating agreement
Each and every member who owns part of an LLC must sign off on all important decisions regarding how profits will be distributed among the members (if there’s more than one). However, without an operating agreement between all parties, setting out the specific terms and conditions involved, not only could disputes arise, but costly legal battles could arise over time if things don’t go as planned! This document outlines everything including ownership percentages & voting rights among other things, ultimately protecting everyone involved by providing clear guidelines set out in advance – making this step absolutely critical when setting up your new business!
Failure to segregate personal and business finances
Mixing personal funds with those intended solely for business use often leads to a slippery slope that can cause major headaches later on, especially when tax returns come due each year, as proper accounting becomes much more difficult without having separate accounts in place during the regular course(s) of conducting day-to-day financial transactions… not only does this leave the door open to potential personal liability either way, but it can also lead to audits, which no one really wants either, right? So please keep company finances separate by using dedicated bank accounts & credit cards specifically used ONLY for company expenses!
Not Following Corporate Formalities Correctly One last key issue worth mentioning has everything to do with corporate formalities – which basically just means following general rules set out by the respective state government where the entity operates to ensure validity thereof remains intact over a period of time regardless of what may happen happening behind the scenes otherwise… From annual filings required to remain compliant status quo continue holding annual meetings amongst shareholders along w/ keeping minutes same record purposes moving forward – neglecting to abide by specifics here leaves wide open door trouble enforcing contracts challenging dissolution efforts altogether should worst case scenario ever arise unexpectedly sadly enough?
Setting up a successful, long-lasting business requires taking care of numerous small details along the way, a daunting experience no doubt, but still manageable given the right resources, and tools available to help streamline the process accordingly (like what ZenBusiness offers!). Taking extra care and avoiding the aforementioned common pitfalls key factors paving the way towards fruitful results saving a boatload of money heartache same token better safe sorry goes saying end day here matter choosing to go route ensuring peace of mind staying focused on target goals objectives desired outcome look forward achieving rather worrying potential consequences forgetting checklist tasks mentioned above throughout journey certainly worthwhile investment valuable resource sake all concerned times coming!