So what is an LLC? It’s a limited liability company which means the owners are not personally responsible for the profits or losses of the business. However, any profits made go to the owners and an LLC does not directly pay taxes, as their profits go to the owners and they then pay taxes on their income. It’s one of the most popular styles of business because it limits harm, maximizes profit incentives all at the same time. However, there are some unique things you need to do before you set up an LLC.
Company name & address
First, you need a brand name. Think of something unique that will stick in the minds of people who read it. Of course, you are still young and your name will take time to stick in the minds of the masses. However, it’s a good idea to keep it short and sweet. Some of the most famous brand names are short, such as Apple, Nike, Pepsi, Adidas, BMW, etc. You can also have a more complex name but make sure that it’s easily pronounced by the consumers you are targeting.
Then you need an address. Even if you are a virtual company you still need to have a real address. This can be something like a virtual address that is in a commercial building. You will have a PO Box and the ability to take real mail. Speak with a company like https://www.1stformations.co.uk/ that can register your business, set up the accounts needed such as a bank, VAT, GDPR, tax, etc.
Then you need to consider who your officials are. This will mean you decide who the CEO, CFO, COO, CRO, and CAO are going to be. Essentially, who is your executive team, who are your board, audit, and non-executive directors. This is the top-down structure and it will be incredibly important with regard to accountability. If the business does something illegal, one of the executive members will be held accountable. This is usually the CEO so it’s vital you choose who your CEO is going to be, regarding their ethics, compliance and discipline. Not to mention, you will need to disclose who the owners are, the board and investors are.
Code of conduct
Not only will you have regulations to abide by, but you will also need your own code of conduct policy. This will be the guideline by which the upper management and middle management abide by. You can go online and research the types of codes you should have, but every business is different.
- Consider who you want managers to behave when there is no clear policy in place for a particular situation.
- Make sure financial policies are in place regarding accurate reporting, something that Sarbanes-Oxley and Basel II can help you with.
- Make sure that proper risk management is in place, see ISO 31000.
With these three things, you can set up an LLC in a relatively short time. It’s one of the most attractive business types but you shouldn’t think it allows you to shirk responsibility.