You have decided to embark on a new journey to see yourself as a successful business owner. And you have selected this article to guide you in your trip; you have come to the right place. This article will cover all the important know-hows required for you to start your company.
Let us take a look at all the essential details; we have presented them in detail:
Step 1: Select the name
Selecting a name, how difficult that can be? You must be thinking that. But it is easier said than done. The company’s name is a crucial aspect that is why it is placed as the first step. Suppose you meet someone or come across some business with a unique and catchy name. Will you look at it again? Will you google it? Of course, you will. It is in the human tendency to get intrigued with something unique. And that is why the name is significant. If your company has some different name, the customers will get attracted, look you up online, or check out your stores, or anything. This is the first step in developing a customer base. Now, we know what the importance is, it is time to look at the how-to name. There are some rules that you have to keep in mind while naming your company. First of all, your name should not be similar to other companies out there. That is the most crucial point. You can check the availability of the name with the Secretary of State online. The next thing you have to remember that the name of the company should not indicate anything illegal. The words like Limited Liability Company or its abbreviations should be present. Also, if your name is similar to the pre-existing name, then you cannot use it. You have to make some changes to its keywords. If you want to check whether your chosen name is available, you can check it from the business search portal of the Secretary of State.
After deciding upon the name, you can even reserve the name if you want it. A lot of reasons can cause the delay of your company’s launch. If you don’t want any other person to select the same name like yours, you can use North Dakota’s facility to reserve the name. For one year, you can lock the title. You have to pay a fee of $10 and send it to the following address:
Secretary of State
State of North Dakota
600 E Boulevard Avenue Dept. 108
Bismarck ND 58505-0500
Or there is another option you can fax the document at (701) 328-2992.
Also, remember this option can be used if there is a delay. If you are starting your company right away, then you don’t need this option. Putting your name in the Articles of the organization is enough.
Step 2: Decide upon the Management Structure
Management structure consists of two options: the Manager-managed and the Member-managed. You need to decide which system you would want to use. The Owners of the LLC are called members. So a member-managed LLC means that the members manage the company and make the decision. While in Manager-managed LLC, this responsibility comes upon the Manager. He/she is responsible for the working of the company and takes the required decision.
Step 3: Appoint a Registered Agent for your LLC
The appointment of a registered agent is a State-mandated affair. It is compulsory for every LLC to have a registered agent all the time. Why is it so important? Because a registered agent is a person who takes care of all the correspondence on behalf of the LLC. All the essential documents, posts, notices go through the registered agent. The state needs a person who will receive all the legal and vital records to reach the proper authority. That is why the state has made it mandatory. You have to enter the name of your registered agent on the Articles of Organization that will make it official. You also have to take the consent of your agent before making it official. It is effortless to designate the registered agent; just put the name and their street address on the Articles of Organization. Also, remember that the registered agent information is public, so make sure the interested party is well aware.
Who can be the registered agent? Any person or an entity can be a registered agent for your LLC. You can hire your friends, family, and acquaintances, anybody you want. However, that person should have an address in North Dakota. You can be your registered agent. Yes, that is true. But that might have some drawbacks, as it adds more responsibility. And secondly, you cannot leave the office during working hours as the registered agent should be present during the business hours to get the correspondence. You can also hire a business entity with an address in North Dakota. If all this seems too much for you, you can opt for the services that provide a registered agent. They will even help you in forming your company and provide a registered agent.
Also, remember that your LLC should not be without a registered agent. It is an illegal and prolonged absence of an agent that could lead to the dissolution of your company. So, when you have to change the registered agent, make sure that the transition is smooth.
Step 4: Submit the Articles of Organization
Your company will be official after this step. You can open your doors any time you want after this. Articles of Organization records your LLC/company with the State Secretary. After you file and it gets approved, that means you have reached the authorization. You can submit the document online, or you can mail it or personally deliver it.
Submission via Online
You have to go to the First stop for the online submission, North Dakota’s online service portal. After that, from an account and log in with your credentials. Then finish the form and submit it. You also have to pay a fee of 135 dollars, and the processing time can vary up to weeks.
Submission via Hard-copy
You again have to go to the website mentioned above, then take a print of the form, fill it and send it to the following address along with the payment of $135. Secretary of State
State of North Dakota
600 E Boulevard Avenue Dept. 108
Bismarck ND 58505-0500
Step 5: Draft an Operating Agreement for your LLC
An operating agreement is one of the vital steps of information about your company. You form the company, but the operating agreement will make sure that the company is running smoothly. What is an operating agreement? As we can tell from the name, it is an agreement, a document that mentions all the company’s rules and regulations. Also, it consists of information like what to do in some specific conditions. It should be agreed upon by all the members and should be signed by them. Although it is essential, it is not mandated by the state. But that doesn’t mean it can be avoided. It helps you keep the conflicts at bay, and if some contests do appear, it helps to solve them. Suppose your company has four members. You have an operating agreement mentioning the details of what will happen at the time of dissolution. If your company gets dissolved and one of the members asks for a higher share, the operating agreement is used as evidence. You can be flexible with your company’s agreement; you can add anything you want. Some of the things that should be present are:
- The contact details of the LLC: the name and the address
- The details of the registered agent
- The purpose of your company.
- The information on the management structure
- The details about your tax structure.
Now, you can write your company’s operating agreement, or you can ask a professional such as an attorney or lawyer. If you decide to write it, then you can use several templates that are available online. If you want to take the help of a lawyer, that is also the best option. The lawyer will be aware of all the state’s rules and help you formulate a detailed operating agreement. He/she will make sure that you haven’t missed anything, not even a single detail. So, it is totally up to you which option you want to go by.
Step 6: Obtain an EIN
EIN stands for Employer Identification Number, which is given by the internal revenue service, IRS. With the help of this number, the IRS keeps track of your company. As the name contains the word employees, you might think that the sole-proprietorship might not require this number. But, that is not true. This number is also used to file taxes, open a bank account, apply for loans, or in the future hire employees. In the absence of this number, you will have to use your Social security number. It can cause concern for the privacy breach. So, for business purposes, it is better to get the Employer identification number. There are three ways through which you can get the EIN: Online, mail, and Fax.
For the online method, you have to go to the official website of the internal revenue service. You can visit the site from Monday to Friday between 7 am and 10 pm. Apply for the number, and within a few seconds, you will receive your EIN. This far is the fastest method. Also, the IRS doesn’t charge anything, so you don’t have to pay any fee.
The second way to obtain EIN is via Fax. You have to go to the official IRS website. From there, download the form and take a printout. Fill the form and fax it to the office at (855) 641-6935. It is going to take four working hours to get your EIN.
The third option is postal mail. It is not the favorite one as it takes time to get processed. You have to go to the IRS website, download the form and after filling it post it to the following address:
Internal Revenue Service Operation
Attn: EIN Operation
Cincinnati, OH 45999
The postal mail method works slowly; it will take around four weeks to get your number.
Until here, you have followed all the steps that are required to form an LLC. If you have followed all the steps, then your LLC is created and is ready to launch. But before jumping off the wagon, it is better to be informed in advance of the steps you have to take after opening the doors of your business. A businessman/businesswoman should be well informed and should not jump right into it.
Step 7: Business licenses and permits
Licensing is not similar to registering through Articles of Organization. Before commencing your business, you have to obtain specific permits and licenses. These permits vary from one industry to another. If you are running a restaurant, you will need a business permit, food and service permit, health permit, etc. If you own a grocery shop, you have to get a license from the agriculture department. Different businesses have different license requirements. It also depends on your location. Is there some local government that has its norms on these permits and licenses? So, you have to be in contact with them to get more information. For the full details of North Dakota’s licensing requirement, you can go to the Secretary of State official page, and under the license, the section can get the complete information.
Step 8: Federal, State, and Local taxes
Federal income taxes
You should never avoid taxes. It is illegal to do so. One thing that is an advantage in LLC is that you have a flexible tax structure. You have the option to pay taxes like an LLC or like a corporation. If you have chosen to file the tax like an LLC, you don’t have to pay straight to the federal government. The tariffs are passed- through the owner’s income tax returns. On their income tax returns, the owners mention the gain and profit; if you opted to be taxed like a corporation, in that case, you have to pay a separate income tax especially filed for the corporation.
State and Local taxes
You don’t have to do something extra here as the state and local taxes are similar to the federal income taxes. The owners pass the profit and loss of their business through their income tax returns. And same if you pay as a corporation, you file corporation income tax. Also, some local governments have tariffs of their own. So it is better to check it out with them before proceeding further.
In addition to the federal, state, and local taxes, there are some additional ones too. That depends on your LLC. If you hire employees, you have to pay the unemployment insurance tax and withholding tax. Similarly, if you sell goods, you have to file the Sales and Use tax. It depends on your type of business. You can get yourself registered at the North Dakota taxpayer access point. You can also go to the ND.gov page to get the complete information.
Step 9: File the annual report
This step comes after a year of the start of your LLC. You must be wondering why you have to know this now. If you fail to file the report, it could lead to administrative dissolvent of your LLC. Yes. Let us look at what is an annual report. The State of North Dakota makes it mandatory for all the LLC to submit the report every year. It consists of all the crucial details: Name of the LLC, name of the members, your progress, any changes, etc.; you have to submit this report on or before November 15. If you file the information on or before the due date, you have to pay $50. Remember, if you fail to submit the report six months after the due date, it will lead to administratively dissolvent of your LLC. You have to visit the First stop web page of the Secretary of State to get the form, fill it and send the printed form to the following address:
Annual Report Processing Centre
Secretary of State
State of North Dakota
PO Box 5513
Bismarck ND 58506-5513
At this point, as far as the formation of LLC is concerned, we have reached the end. But it’s not the complete end. Your LLC will be ready after you follow all the steps, but there are some things that you have to keep in mind. These points play an essential role in the smooth running of the LLC after its formation.
Set up a financial structure
While doing business, you deal with lots of financial stuff. What should be a reliable solution? You have to build a financial management structure. It will help you to manage your expenses and take note of them. You have to keep the financial and personal assets separate. How can you do that? By following the below-mentioned steps.
- Open a bank account for your business.
First of all, you have to select the bank to set up your business account. The different bank offers different facilities. So, choose a bank that is perfect for you and open a bank account. A bank account will help you separate the business assets from your private investments, especially your business. If they are not separated, then it won’t be easy to prove what belongs to you and your business. LLC provides limited liability protection that means if your LLC faces a lawsuit or is in debt, then your assets will not be used. Your purchases are separated from your business. But if they are mixed, then how will you prove? That is why a separate bank account is a must. It will also help you to file the taxes and keep a record of them.
- Business Credit Card
After opening the business account, you also have to get a business credit card. The first point is that it is essential to separate the assets. Secondly, if you have a credit card solely for your business, you can get loans quickly for your business with great offers too.
All the legal formalities are done, your business is set up, then what? A company is only successful if it has customers. And what is the best way to attract customers: Marketing. You have to find a way to bring customers to your business.
- Create a website for your business
It is a go-to for customers to check out your business. Websites are the easiest way to get customers. If you have a website with all the information, it will be easier for the customer to reach you or your business. Nowadays, with the help of technology, you can create a great website easily.
- Press release
The easiest way to get the word out of your business for a wider audience is to send a press release. The customers will get to know about your business, they will check the website, and if they like it, they will stay for sure.
Safeguard your business
This step is also an important point to follow: trademark. Trademark means only you have the rights to your business name, slogan, etc. nobody can use it. This is vital because you have spent hours establishing your business, so it would not be fair if someone else uses your name, logo, etc. So it is vital to protect your identity.
The next step to safeguard your business is to have insurance. There are many insurances available according to different needs. You can use anyone you want. Insurance will make sure that in times of calamity of any form, you are covered. It will help you to move forward without worries.
Now, we have finally reached the end. Congratulations, you are now ready to start your business and achieve greater heights.