If you’ve clicked on this article chances are you want to start a business or have already done so and want to make it legit by creating a Limited Liability Company (LLC).
That’s great news! Kudos to you for going after your dreams.
The process of creating an LLC is relatively simple but it’s important to highlight the financial management that follows.
Are you ready to budget fixed expenses?
In the excitement of creating an LLC, one of the things people overlook is budgeting for the state-mandated annual report. For example, in Florida, if you create an LLC you are required to submit an annual report to keep your LLC in active status. The annual report in Florida is currently $138.75, and prices may vary from state to state.
Businesses who fail to budget this annual fixed expense are prone to forget the submission deadline for this crucial report. Failure to submit it puts your LLC at risk of losing your active LLC status, which can result in losing your clients, and you’d be hit with the penalty of paying hundreds of dollars to get your LLC renewed as active.
Do you know your banking options?
One of the other areas worth understanding when managing your LLC is finding a bank that will work with your business needs. For smaller businesses who’ve just created an LLC, your aim should be to keep your expenses low, including any banking fees. You’ll want to research banking options that have no monthly fees, especially if your business doesn’t have a lot of expected revenue in the pipeline.
Have you researched the impact on your taxes?
It’s also important to understand the tax implications which include researching the percentage of earned revenue you’ll need to put aside to pay in annual taxes.
Pro-tip: When managing your LLC financials consider only writing checks or making payments out of the business account. By doing so, you’ll streamline all your expenses from one account which should alleviate any headaches come tax season.
Commit today to map out a mock annual budget and compare it to your future revenue goals. This will ensure you are able to sustain your business with enough capital to grow and scale. You got this!