Are you in the process of establishing a new business? As you create the framework for your business, one of the initial and most impetrative decisions you will make is how you setup the structure of your business. In the state of Nevada, as is the case in majority of states, the most accepted business structures small business owners select between are sole proprietorships and single-member LLCs. While they are equally basic to setup, each entity has its own unique legal, financial, and tax implications. It will benefit you to contact Nevada Small Business Consulting to learn more about which is entity will be most advantageous for your business goals and personal objectives.
Establishing Your Business Entity: Sole Proprietorship vs Single Member LLC
A sole proprietorship is different than other business entities because it’s the only type of business that is not required to have to register with a state. All other business entity types, such as partnerships, limited liability companies, and corporations. are required to fill out a registration form with each state in which they plan to conduct their business. Establishing a sole proprietorship business is fairly basic process. You will be required to follow the following initial steps:
- Establish your business name and determine a location for your business
- File for a business license with your city or county, or receive permission from your locality if you plan on operating your business from your residence.
- Create a business checking account with your local bank.
- If are selling products or services that are taxable, you are required to register with your state’s taxing authority.
- If your business has employees employees, you’ll need an Employer Tax ID Number (EIN). Your bank may also require this tax number.
Business owners who decide to establish their business entity as a single-member LLC will be instilling a legal detachment between themselves and their business. A new business owner that is establishing their business entity as a limited liability corporation must formally register the LLC by filing their Articles of Organization with the state. When filing Articles of Organization, the LLC’s business name will simultaneously be registered. It is recommended that LLCs should also institute an Operating Agreement. An operating agreement is a key document used by LLCs because it outlines the business’ financial and functional decisions including rules, regulations and provisions.
In the next article, we will continue to discuss the differences between registering your business as Sole Proprietorship vs Single Member LLC, with a focus on the Legal Protections and Personal Liability of each. If you are seeking assistance setting up your business as a Sole Proprietorship or Single Member LLC, you can contact us today at (702) 758-4691 to schedule a quick no-cost initial consultation.