The Basics of LLC & EIN Numbers

So, what is an LLC you ask?

LLC stands for Limited Liability Company, which is a type of registration for your company. It means that if someone sues you or comes after your company, that they can’t come after your personal property too.

Investopedia defines an LLC as:

A limited liability company (LLC) is a corporate structure in the United States whereby the owners are not personally liable for the company’s debts or liabilities. Limited Liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

If for some reason your company goes bankrupt, this means that banks cannot come after you personally. I mention this, but many banks have caught on and do require one of their owners to take ownership and responsibility for debts until they grow to a certain point. This is a great question to ask your bookkeeper or accountant, as an LLC can have many different benefits for every company.

How to register for an LLC easily

My favorite company to register an LLC is www.MyCompanyWorks.com . It’s worth the fee and they’ll remind you to renew your LLC every year. Some people register their companies in certain states for tax benefits but your accountant will be able to tell you what is legal and the best thing to do.

Scam Alert: When you register your business, you may get an item in the mail saying you need to buy a certificate for $100 or so. Don’t freak out, this is a scam and read it carefully. Google the company when in doubt. These letters look very official but it’s nothing you have to worry about.

Getting an EIN Number

When you register your business, you will get an EIN number. This stands for Employer Identification Number. This is like a social security number for your business. You normally don’t have to put your social security number on documents if you have an EIN number.

You can get an EIN number for a Sole Proprietorship but you will need to Google to see how to do it for your state.

It is a good idea to get this number at the beginning of your business and keep it for a certain amount of years, because many times when you’re looking to get a loan from a bank, they want to see that you’ve been in business at least 2 years and this is proof you have been. And when your company gets to be a certain size, you can use this EIN number to take out loans and things not in your name but in your company’s name, so that the loans or credit cards won’t impact your personal credit.

Here’s a guide on how to register for an EIN and how to figure out if you need an LLC.

Have any experiences where an LLC would’ve helped your business? Give examples below!

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