When you start a limited liability company (LLC), in most situations you will need to obtain an Employer Identification Number (EIN). In Indiana,the ...
How to Name an LLC
If you are starting a business and considering forming a limited liability company (LLC), at some point you’ll have to choose an LLC name. Your company’s business name is often the first impression clients have of your brand, so you want to make it something unique and appealing. This article will provide you with tips and guidance to help you get started.
What is an LLC?
An LLC is an increasingly popular business structure for startups, offering liability protection for ownership and greater flexibility than a corporation, particularly in terms of taxes. The LLC itself does not pay taxes. As a “pass-through” entity, income passes through the business to the owner or owners, who report it on their personal tax returns. An LLC is created by filing paperwork with your state, and nominal fees are involved.
An LLC offers its owner or owners, who are called members, considerable flexibility in terms of management. You can choose your management and operational structure and decide how you want to be taxed. Your LLC can have a single member or multiple members, all of whom have personal liability protection, meaning your personal assets are not at risk if you cannot pay business debts or are involved in a lawsuit.
Naming Your LLC
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell — i.e. “Zoom”, “Amazon” — tend to do better
- The name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords in the name, such as “meats” for a butcher, boosts SEO
- Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step business name generator
For an LLC you must include “LLC,” “limited liability company”, or “limited liability”, in the name.
Once you have a few potential names, check your secretary of state’s website to confirm they are available to register. You should also confirm that the name you want to register conforms to your state’s regulations on business names.
It’s also a good idea to check for nationally trademarked names, to ward off any potential problems later if your business expands, and check the availability of related domain names at a web cataloging site such as Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Once you’ve found a name that clears these hurdles, you can complete a name reservation form on your secretary of state’s website.
Using a DBA
If after you have named your LLC you realize you’d like to do business under a different name, don’t stress! All you need to do is register a DBA, or “doing business as.” Simply put, a DBA is a name registered for a company to do business under that is not its legal business name. For example, you may have an LLC called “Smith Enterprises”, but you do business under the name of “Smith’s T-Shirts”. A DBA name is also sometimes called a fictitious name or a trade name.
Benefits of a DBA
Many companies choose to use a DBA because it provides benefits to the business.
- You can choose any name and build your brand. Most DBAs are filed by sole proprietorships so that they can do business under a name that is not their own, and build a brand with a name that is associated with what the business offers. LLCs choose DBAs usually so that they can brand all of their product lines. “Smith Enterprises LLC” might have multiple DBAs such as “Smith’s T-Shirts” and “Smith’s Shoes”.
- Your bank accounts can have your business name. If you have a registered DBA name as an LLC, customers or others can make payments to your DBA name. This means that you can keep your business finances for each of your DBAs separate for accounting purposes
- You can scale your business. You can have DBAs for any business that you want to operate under your LLC, so you can grow and diversify with names that identify each part of your business.
What a DBA Does Not Do
- A DBA is not a business structure and gives you none of the benefits and protections of an LLC or corporation.
- A DBA does not protect your name, generally, from being used by other companies. If you have an LLC, no one else in your state can use your LLC name. The only way to protect your name throughout the country, however, is to trademark your name.
How to File a DBA Name
Filing requirements for a DBA vary by state, county, and city, and also by business structure. Check with government offices in your area to find out what and where you need to file. Fees generally do not exceed $100. You can most often file to register your name online.
In some states, you may have to place an ad in a local newspaper to announce your intention to use the name and run the ad for a certain period of time. This is to fulfill public notice requirements in those states. You should search online to make sure the name you’ve chosen isn’t already being used. Your state’s website is a good place to start.
If your LLC operates under a name that is not your LLC name and has not filed a DBA, you can face significant fines.
In some states, you may have to periodically renew your name registration. Make sure you stay on top of these deadlines to ensure you’re operating legally.
How to Form an LLC
- Choose Your State. The first step is to choose the state in which you plan to do business. LLC processes and requirements vary by state, so visit your state’s website for details. Generally, you can form your LLC with an online application. If you plan to have physical locations in more than one state, you will need to register a foreign LLC in the states where you will do business other than your home state.
- Choose Your LLC Name. Your business name is extremely important. It should reflect the brand you plan to build, tell customers what you do, and be memorable. Once you’ve chosen a name, you’ll need to make sure that it’s not already taken. You can do a search on your state’s website, and on other state websites if you are doing business in more than one state. You should also check the US Patent and Trademark Office to make sure the name hasn’t been trademarked.
- Choose a Registered Agent. A registered agent is the person or company that sends and receives legal documents on behalf of your LLC. The registered agent can be a member of the LLC, or you can choose a third party such as an attorney, or a company that offers registered agent services. Most states require you to have a registered agent. The agent must be a resident of the state where you do business, or a corporation authorized to do business in your state.
- Determine Your Management Structure. There are two types of management structures:
- A Member-Managed LLC is managed by the members of the LLC. This is usually chosen by smaller LLCs with few members who will be involved in various management roles.
- A Manager-Managed LLC is managed by people who are not members of the LLC and are employees of the business. This structure is often used when an LLC is larger and has multiple members.
- File Articles of Organization. The articles of organization is the form you file to create your LLC. These forms vary by state but can generally be filed online. You’ll need to fill out the LLC name, the name and address of the registered agent, the names of the LLC owners, and in some states, the way the LLC will be managed. Fees are generally around $100.
- Draft an Operating Agreement. An operating agreement is not usually required but is highly recommended. The operating agreement should clearly define the following:
- The percentage of each member’s interests in the LLC
- How profits and losses will be allocated to each member
- Each member’s rights and responsibilities
- The management structure and management roles of members
- The voting rights of each member
- Rules for meetings and voting
- What happens when a member sells their interest, becomes disabled, or dies
It’s a good idea to have an attorney’s help when creating your operating agreement so that you can be sure you’re covering all bases to protect all members and avoid future issues.
- Apply for Business Licenses. It’s important to make sure you’re in compliance with all laws at the local, state, and federal levels. It’s likely, depending on your location and type of business, that you’ll need business licenses and permits. Do some research to determine which licenses you need. At the very least you’ll need a sales tax permit to sell products and collect sales tax.
- Obtain an EIN. EIN stands for Employer Identification Number and is like a social security number for your business, allowing the IRS to identify your business easily. It is also known as a Federal Tax Identification Number (FTIN), or sometimes for corporations a Tax Identification Number (TIN). An EIN is required if your LLC has more than one member, if you plan to hire employees, or if you choose to have your LLC taxed as a corporation. The application is free and can be found on the IRS website. The application is form SS-4, and it can be mailed to the IRS or submitted electronically, and once your information on the application has been validated, the EIN is assigned immediately.
- File Annual Reports. Your state may require you to file annual reports for your LLC, which may involve a fee. Check your state for requirements.
Remember, your business name reflects your identity, so choose one that fits the brand that you want to build. Whether you choose to do business with your LLC name or with a DBA, your name is one of the most important decisions you will make. Again, you can use the Step by Step business name generator if you’re having trouble coming up with the right name for your business.