A limited liability corporation (LLC) can be a great way for new business owners to protect themselves. As the name implies, the formation of an LLC helps reduce how much personal liability someone has when starting a new business.
An LLC can shield them and their personal assets from claims in civil lawsuits or from creditors. Starting an LLC can be difficult, but taking the three steps below will help you prepare for your new business.
Create a business plan
Before you actually file paperwork to start a business, you have to have a plan in place. You need to commit to a specific business model and create a written plan that describes your operation, estimated expenses, and business goals. That plan will then guide you through the early stages of developing the company.
Choose a name, and make sure you can use it
Once you have the basic model for your business established, the next step is to think about your brand. The right name can help set you apart from your competitors and make you more memorable. Once you have picked a name, you will need to check the state database of corporations to make sure that the name is available for you to use.
Create separate financial accounts as soon as possible
One of the easiest ways to undercut the benefits of an LLC would be to commingle your personal assets with those belonging to your company, possibly by using your own bank account when starting your business. The sooner you create separate accounts, the less likely you are to face accusations of commingling later.
Taking the right steps when thinking about business formation can help you protect your idea and your investment.