What kind of company you want to form is one of the first decisions you must make when beginning a business. For small business owners, creating a limited liability company (LLC) is a popular choice. A business form known as an LLC offers liability protection for its shareholders as well as flexibility in management and taxation. The creation of an LLC does, however, have some drawbacks, such as more paperwork and costs. You might also question if you can use different DBA (Doing Business As) identities under one EIN (Employer Identification Number) if you wish to run multiple businesses under a single LLC.
Yes, you can have numerous DBA names for your LLC under a single EIN, to put it simply. In fact, enterprises that provide a variety of goods or services but don’t want to set up distinct legal corporations for each one frequently employ this strategy. It’s crucial to remember that each DBA name needs to be registered with the state where the LLC is registered as well as any other states where the business conducts business. By doing this, the company can be made to operate legally and be held responsible for any financial or legal obligations.
Even while managing several businesses under one LLC can be economical and successful, there are some drawbacks to take into account. The increasing administrative workload is one of the main drawbacks. You’ll need to register each DBA name with the state, and you might need to submit separate tax returns or business license applications for each one. This can take a lot of time and may call for additional resources, such hiring a specialist to help with the paperwork.
The potential for client or customer confusion is another drawback. Customers may find it challenging to identify the business with which they are dealing if you use various DBA names, and this may result in a lack of clarity in your branding and marketing. Additionally, if one company experiences legal or financial problems, it may have an impact on the operations and reputation of the other companies that are members of the same LLC.
In California, forming an LLC costs $70 plus an extra $800 franchise tax fee for companies with annual revenue over $250,000. The deadline for this yearly charge is the 15th day of the fourth month following the end of the tax year. Additionally, California LLCs are required to submit a yearly statement of information, which can be done for $25 by mail or $20 online.
You must do the following actions in order to form an LLC in California: 1. Pick a name for your LLC that is distinct and has not already been taken by another company.
2. Submit articles of incorporation by mail or online to the California Secretary of State. 3. Obtain any business licenses and permits required by your area or sector. 4. Draft an operating agreement outlining your LLC’s ownership and management structure. If you intend to recruit staff or open a company bank account, get an EIN from the IRS.
If you own an LLC, you can choose how you want to be paid by the company. Taking a salary as an employee of the LLC, which is subject to payroll taxes and withholdings, is one typical strategy. A different choice is to receive a distribution of profits as a member, which may be subject to self-employment taxes but is not subject to payroll taxes. To establish the best approach to pay yourself from your LLC depending on your unique financial position, it’s vital to speak with a tax expert.
In conclusion, managing many enterprises under a single LLC is feasible but has unique difficulties. Although it could be a cost-effective and successful approach to run your business, it’s necessary to take into account the administrative burden and possibility for customer confusion. Additionally, there is a fee associated with creating an LLC in California, as well as compliance with state laws and yearly filings. There are various ways you might pay yourself from your LLC, so it’s crucial to speak with a tax expert to figure out which option is ideal for your particular circumstance.