Register Your Record Label (Single-Member LLC’s) – What You Need to Know
When starting a business, it’s important to make sure you are registered in all the correct places and doing the right tasks, so you can efficiently run your company. Here are the most essential tips to know, to make sure you stay liability proof, and to have personal protection when operating your company.
What is a Limited Liability Company (an “LLC”)?
An LLC is a type of company you can form, and is essentially a liability shield that protects you from personal liability. It is there to protect you personally, in case you ever get sued. It’s in place so that if you were to ever lose in a lawsuit (heaven forbid), your LLC will be the one owing money on a judgment, instead of you personally. Registering an LLC allows you to protect yourself and protect your personal finances, by creating that important liability shield.
What is a Single-Member LLC?
A single-member LLC is a company that only has one member (usually just you). Meaning, there is no one else in the company, including no partners or investors. Remember, you are the boss, and you are the sole decision-maker when it comes to your LLCs.
Register Your LLC
Once you decide you’re going to register your LLC, you are typically going to do it in the state that you live in, because that’s where you are conducting your business. You’re going to do this typically through the Secretary of State. After finding the paperwork and filing it (a Google Search will typically bring up the appliable Secretary of State website), you’ll then pay a fee, and then register your LLC. Remember, you can always hire an attorney to do this on your behalf.
Get Your EIN
Once you have your LLC, your next step is to get an “EIN” (Employee Identification Number) through the IRS website. You can get this in under 10 minutes typically. The EIN operates essentially like a social security number for your company. Just visit www.irs.gov to get your EIN.
Open Bank Account For Your Business
Now that you have your LLC and EIN, you’re going to open a bank account in the name of your LLC. One of the best tips to remember is to always only use your business bank account for business purposes. Do not cross-pollinate and have money coming in from different business ventures, or use your business bank account for personal expenses. Doing that is going to give the impression that you’re not treating your LLC like a real company, which can potentially create personal liability.
The next essential part of your LLC is getting an Operating Agreement drafted. The Operating Agreement sets forth the rules of the road for your LLC. If you are a multi-member company, the Operating Agreement is helpful to say who does what, including what happens with the bank account, and who gets to spend company money. Even if you are a single-member LLC, it’s still a good idea to put an Operating Agreement in place, because it shows that you take yourself seriously, and it really helps if anyone were to challenge the legitimacy of your business at any point.
If you’re having a meeting and you’re making decisions, make sure to document everything using Meeting Minutes. Whether you’re a multi-member LLC or a single-member LLC, it’s really helpful to revisit any notes if something goes wrong, or if there are questions about what happened during a meeting. As with the Operating Agreement, Meeting Minutes also show that you have a legitimate LLC, and that you are operating it like a real business. You can even do something as simple as recording your meeting (video or audio), and that recording can be used in place of formal Meeting Minutes.
With all this in mind, remember to make sure you take the right steps in protecting yourself, and register your LLC to help you stay liability proof.