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If someone wants to build a career for themself, then it is best to treat their job as a business. An LLC can exactly do that. An LLC will give a business a lot of things that will make the business more professional, and it will put it in a lower-risk position, but there are ways to form an LLC, and everybody should do it the right way. In this article, there is everything needed to know about LLC for bookstores and how to form one.
A Quick Preview:
What an LLC Does for a Bookstore
There are several things an LLC does for business, including bookstores. Mainly, people would start an LLC for its limited liability protection, but there is more to a bookstore LLC than its legal protection. When starting a business, whether it's an online business or running a store, business owners will be treated as sole proprietors. Being a sole proprietor is usually cheaper and more cost-friendly than being an LLC, but it also has its downsides, which an LLC does not. Here is what an LLC will do to a business.
- Limited liability protection
- More taxing options
- more generous IRS tax return
Why Forming an LLC is a Good Idea for Everyone
Before talking about what goods an LLC does, some people have been consulting others to not get an LLC at the start of their journey because it is not going to be worth the money, or the annual fees they are going to be paying, and they are not going to get sued because they do not have any customers, and so on. First off, an LLC will cost more than being a sole proprietor. Along with an LLC, having a registered agent is also required, and the top-rated registered agents are going to cost even more. But there are some LLC services that will form an LLC for absolutely free. They also come with a free registered agent and an operating document. There will be one of these free LLC service companies later in this article. With these fees, having an LLC for a business is definitely worth investing in.
Limited Liability Protection
As a sole proprietor, someone's personal assets are not protected in case of a lawsuit. What that means is that if someone sues a business owner, and they have to pay charges, if they can't pay the charges, the person who sued can go after their houses, their cars, their bank accounts, their jewelry, and basically all they have. Even if the fault is not on the business owner, everything can turn around, and people can still go after their personal assets. But if someone is protected by an LLC, the only thing that there is to go after in the case of a lawsuit is the business assets. That way, all the personal assets of the business owner are protected by the LLC.
Remember that a bank account for the business is necessary, and people can go after that, but they cannot be going for any personal bank account that is not related to the business.
Do not think that, "Why should a bookstore get sued" or that "The store does not have any customers so no one would sue it." These days, everybody can sue everybody else for a bit of money, so limited liability protection is a good thing to have even if the business is brand new.
More Taxing Options
With an LLC, there are a lot of other tax options to choose from. People might be thinking that forming a corporation will give them the same limited liability protection that an LLC provides, so why not form a corporation instead of an LLC? The reason why differs in taxing. A corporation is an old form of business, and back then, the law drafters would think it is best to separate the business to tax the corporate and the business shareholders twice. One tax for the corporate income and one other tax on the personal income of the shareholders. This is known as double-taxation or C corporation (C corp).
An LLC will not have double taxation, and it will have better taxing options such as S corp or pass-through taxation. The business owner can choose either way of taxing that they want.
Pass-through taxation is usually the tax method recommended for beginners. With pass-through taxation, the business owner pays tax only once, as a personal tax, and their own salary. Although when forming an LLC, the business and personal will get separated, the tax will depend on the personal income of the business shareholders.
An S corp taxing is taxed the same as pass-through taxation, but for businesses with more revenue, and the ones who want to save their revenue through the year and move it along. Most of the LLC formation services will provide an S corp taxing file, which the business owner can fill, and give it to the secretary of government to be taxed as an S corp instead of pass-through taxation, which is the default way of getting taxed for an LLC.
There has always been the question of going with S corp or pass-through taxing. The wise thing to do here is to consult with an accountant or a business expert on which one is better at the moment. All three of the LLC formation services in this article will offer consulting and business planning, But the common suggestion is to start off the business with pass-through taxing. After a year of working with it, change it to S corp, and work another year with that as well. After having the numbers from both taxing ways, compare them to one another and see which one is more tax beneficial for a bookstore LLC.
A quick and helpful feature of having an LLC is its tax return. Normally, there will be an IRS 1040 , and in that, the business owners can include their costs over the year, and based on that, they will receive an amount of tax return. In an LLC, the 1040 tax return will come with a much more generous amount of tax return because the business is actually an LLC but not a sole proprietor.
How Much Does it Cost to Form an LLC
Forming an LLC for bookstores comes at very variable prices, from a thousand or thousands of dollars to as low as $45 or under 100 dollars. The price of it is dependent on so many things. First off is the LLC service company that ranges between free to a thousand dollars. The online incorporation services in this article will charge at the maximum price of $299, which is very reasonable compared to other companies.
Another thing that will cost for forming an LLC is the state fee that is also different depending on the chosen state to form an LLC. One thing to keep in mind is that the chosen state does not have to be the location of the business or the state of residency, so choose any state that is better. The prices for each state varies from $45 to $500, but their turnaround time is also different from one another. Here is the price for each state.
Some states will also charge an annual fee for an LLC . For example, the state of California charges $80 per year.
How to Form an LLC
This is going to be a quick section because forming an LLC is incredibly easy with any LLC formation service, especially the companies mentioned in this article. It is going to be just a few clicks and the payment in the end. There will be some waiting from both the LLC companies to confirm the data, and there will be a turnaround time for the state, which in some cases, both of them can be expedited. But there are still a few things that are required for an LLC.
An operating agreement is a must-have for any LLC. Without it, the business could easily lose its limited liability protection. An operating agreement is basically a guideline for the business that declares who does what in the business, and how the business operates. Without it, a person can claim that one staff member is not doing their job, or what is wrong with the business, and without an operating agreement, it is impossible to back up how the business is running.
An EIN Number
Having an EIN number is crucial for an LLC as well. All of the LLC service companies do offer to get an EIN number, even if someone is out of the US it is possible to get one. Having an EIN is required for having a business bank account.
Business Bank Account
Business bank accounts are also essential for an LLC. Without a business bank account, someone would have to put their income in their personal bank account, and remember, limited liability protection does not cover personal bank accounts. So if someone is going for a business bank account, it is better to go for the best business accounts for LLC.
Our List of the 3 Best Services for Registering an LLC for Bookstores
Editor's choice - Most value returner — ZenBusiness
ZenBusiness is one of the best companies to form an LLC for bookstores. They have one of the most significant customer supports that will reply almost immediately, and it will resolve any kind of issue as fast as possible. The plans are extremely at a good price compared to its other competitors, and they all offer features of excellent quality.
The starting price for ZenBusiness packages is $49, and along with it, they will also give a free registered agent for a whole year. Besides that, there is also an operating agreement, which as mentioned, is vital for every LLC to have. Their best bundle, which comes at the price of $299, also has one of the best features, and that includes designing a website for the business. For a bookstore, having an online shop is great.
Most Beneficial — IncFile
The biggest advantage that IncFile has compared to its competitors is that it is %100 free. Some other companies are also free, but their paid features are super expensive. IncFile is not only free but also has very cheap and beneficial prices. Their ultimate bundle is also at the price of $299 with great features. One other thing that IncFile is ahead of when compared to competitors is its turnaround time, which is less than a few days, and in some cases, in a day.
IncFile also comes with a free registered agent for a whole year, so with only the state fee, someone could get an LLC with a registered agent and all the needed documents. IncFile has been working since 2004, and they have one of the most experienced staves among the LLC companies.
Most Experienced — NorthWest
NorthWest has more than 25 years of experience in forming an LLC. They have a highly experienced staff that will be of big help for beginners, which is totally expectable with their amount of experience in the industry. Using their service to form an LLC is very simple and straightforward, and working with them will be of great help to any kind of business.
Similar to the previous companies, NorthWest also comes with an annual free registered agent. Their turnaround time is a lot better than other companies, and using their packages is super easy. The prices of IncFile might be a bit more appealing, and the return value of ZenBusiness can be slightly better, but NorthWest is also the most experienced one, and working with it will make no one less happy than people who use other companies.
How can someone choose between these three LLC companies?
If someone looks for something beneficial, and they have short-term goals for a business, IncFile is a good option. ZenBusiness is better for those who want to invest in their business and grow it slowly. And at last, a company that is fairly easy to use and saves a lot of trouble, NorthWest can be that company.
Three of the best companies for forming an LLC for bookstores were suggested in this article. All of them are great companies and what separates them are slight changes, and nothing more. ZenBusiness tends to return more value as the business grows, and they can be a great help to beginners who want to have their own bookstore.
A big thank you for reading this article. If there is any question that needs an answer, make sure to comment them down below, and say a few words about this article.
- About form 1040, U.S. individual income tax return. Retrieved from: https://www.irs.gov/forms-pubs/about-form-1040
- Matt Horwitz (October 26, 2021). LLC Annual Fees by State. Retrieved from: https://www.llcuniversity.com/llc-annual-fees-by-state/
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