Getting an LLC in Louisiana
If you’re setting up a business in Louisiana, you’re probably wondering if an LLC is a good choice for you. Read on to learn about this type of corporation and how to get an LLC in Louisiana.
What Is an LLC?
An LLC is the abbreviation for a limited liability corporation.
When you start a new business, there are different ways you can set it up:
- Sole proprietorship.
- Limited liability corporation or LLC.
- S corporation or Inc.
- C corporation or Inc.
If you are planning to set up a business, starting an LLC in Louisiana is a great choice.
What’s the Difference?
Sole proprietorship: This just means that you run your business under your own name. There is no separate account and you file taxes as an individual.
Most people start off this way. For instance, if you sell a few items online or at yard sales, you are probably a sole proprietor.
A sole proprietorship doesn’t require any legal filings, but it doesn’t protect your business or your assets.
Incorporation: A corporation separates your business and personal finances. It has very strict tax filing requirements. A corporation usually involves outside investors.
The choice of a “C” or “S” designation depends on how you want to file your taxes. With an incorporation, you must pay taxes as an individual on profits from your company. With a C corporation, you must also pay corporate income tax. Corporations also have strict requirements for the way your company’s management must be set up.
Limited liability corporation: An LLC gives you the legal protection of an incorporation with easier taxing and management requirements.
With an LLC, you must separate your personal and business finances. This is an advantage, because it means that if you are ever sued, the person or company suing you can only sue your business assets. They cannot sue your personal finances, property or assets.
An LLC Louisiana allows flexibility in how you file your taxes. It also has more flexible rules about management.
Most people who are in business for themselves prefer the flexibility, ease of setup and flexibility of an LLC.
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Why You Need an LLC in Louisiana
If you have a business in Louisiana, setting it up as an LLC is the best way to protect your and your family’s finances. It also makes it easier to do separate accounting.
What If You’re a Very Small Business?
Some people think that their business is “too small” to need incorporation. This is a mistake for several reasons.
One is that no matter how small your business is, it’s important to protect your personal property. The second is that as your business grows, you will appreciate the protection and tax filing flexibility that an LLC gives you. Third, you may be required to have an LLC to work in certain industries.
Protect Your Personal Assets
An LLC protects your personal money and property.
If your business goes under or you file for business bankruptcy, your creditors can go after your LLC’s bank accounts, assets, vehicles and property, but they can’t touch your personal property. You don’t risk losing your personal car, your home or your personal money.
As an example, imagine that you own a contracting company. One of your workers crashes into a customer’s shed while driving your company truck. If you have an LLC, the homeowner cannot sue you personally for any damages. The homeowner can sue your company and the worker, but you don’t have to worry about losing your personal assets.
Protect Your Business
If you have employees or partners in your business, an LLC protects you from their mistakes or negligence. If they do something illegal or immoral while they’re working under your company name, having an LLC means that you won’t be held personally liable.
Even if someone files a lawsuit against your company and wins, the lawsuit can only go after your company’s assets. It can’t touch your personal money or property.
Easier Management Setup
Corporations have strict requirements for management and partnerships. With an LLC, you can set your business up as a single member or a partnership. The choice is yours.
When forming an LLC in Louisiana, you only need to name one “designated representative” for tax and business purposes. You can select yourself as the designated representative if you’re filing as a single-member Louisiana LLC.
Make It Easy to File Taxes
As an LLC, you can choose whether to file taxes as a partnership or as a corporation. You will use IRS Form 8832.
A tax professional can help you determine which form of filing is to your benefit.
We Can Help You Make the Right Choice
Our legal advisers can give you expert advice on the right corporate setup for your business. They specialize in helping businesses of all sizes set up LLCs in Louisiana.
Do You Need an LLC in Louisiana?
If you are doing business in Louisiana, you should get the correct business license and set yourself up as a corporation. Being in compliance with all laws and regulations means you can operate freely without fear that the government will shut your business down.
Should You Incorporate in Another State?
Some people believe they can beat the high taxes where they live by incorporating in another state. The state of Delaware is a popular choice because its corporate tax rates are very low. That’s why it has more corporations registered there than any other state.
Don’t listen to well-meaning people who tell you to incorporate in a low-tax state. You might be setting yourself for disappointment.
Double the Paperwork
If you think filing business paperwork and taxes in one state is a pain in the neck, think about doing it for two separate states. That’s what you’ll have to do if you operate in one state and incorporate in another. You must designate representatives, file taxes, pay fees, and submit annual reports for two separate states with separate requirements.
Double the Taxes
If you think you’re going to save money by incorporating in another state, think again. Now, you’ll have to submit taxes for two states. You have to find the forms, fill them out, submit them and pay the taxes for the state you work in and the state where you’re incorporated. You could end up paying a lot more than you expected.
Complicated to Close
If you incorporate in another state and then change your mind, it’s not that easy to reverse course. Closing a business in one state and bringing it to another, which is known as “domestication” of a business, is a long and complicated process. You should hire legal help if you plan to do this.
Not a Good Idea for Small Businesses
Incorporating in a low-tax state sounds like a good idea, but if you’re a small or medium-sized business in Louisiana, it promises to be a giant headache.
Many large, multinational companies incorporate in states like Wyoming and Delaware because they’re large enough to make it worthwhile. If you’re a Louisiana business, make it easy on yourself by incorporating in Louisiana.
How to Get an LLC in Louisiana
The state of Louisiana has an online business portal called geauxBIZ. There, you can find all the forms you need for any type of business filing. You can also find instructions for filing and general advice on setting up a Louisiana business.
State of Louisiana LLC Filing
There are four steps to a state of Louisiana LLC filing.
Step 1: Reserve Your Business Name
Louisiana allows you to reserve a name for your business. You can do a Louisiana LLC search to make sure that the name you want isn’t already assigned to another business.
Step 2: Get an Individual Taxpayer ID Number
You will need a new individual taxpayer number (EIN) from the Internal Revenue Service.
This is separate from the number you use to file your individual taxes. That number is normally your social security number. Foreign residents use an EIN to file their individual taxes.
You must have your business EIN before you file as an LLC. You can get the EIN directly from the IRS. To get it:
- You must choose a name for your business. You can choose your own name or come up with a new one. The name on your EIN must match the business name on your LLC filing exactly.
- You must name the state where you’re incorporating the business.
- You must name a designated representative.
- The IRS issues an official letter with your new EIN. You must print this out immediately or wait 10 days to get it in the mail.
- Keep the IRS letter with your new EIN with your important legal documents. You will need this letter to set up a business bank account in your company name. Most banks won’t set up a business account in your business name without proof of a new business EIN.
- Contact our legal help advisers if you need assistance with the EIN paperwork. One mistake on your IRS paperwork will cost you hours of wasted time to fix. We make EIN filings quick and easy.
Step 3: Complete the Filing Paperwork
You can download the paperwork from the Louisiana LLC state site. You can file the paperwork online.
If you prefer, you can file the paperwork in person at the Secretary of State office located at 8585 Archives Avenue in Baton Rouge.
If you need help with the paperwork, contact our legal advisers. As with your EIN paperwork, one mistake could end up costing you time and money. It can also delay the establishment of your LLC. We can make sure your paperwork is properly filled out.
Step 4: Pay the State of Louisiana LLC Filing Fees
Once you pay the fees, the state will process your paperwork. The processing times can take several weeks. If you want to get your paperwork processed quickly, you should choose expedited processing.
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What Are the Fees for Forming an LLC in Louisiana?
The fee for filing an LLC in Louisiana is $75. The fee for a certified copy of the articles of incorporation is $15. You will need certified copies to show proof of your business.
If you are going to work as a contractor and your employer requires you to set up an LLC, you must show them your certified copies of the articles of incorporation. Many businesses will not accept copies that are not certified.
Your total cost to file a Louisiana LLC comes to $90. Additional fees, expedited processing and multiple copies will add to your fees.
Get Help Forming an LLC in Louisiana
Incorporating your business as an LLC is an excellent idea. If you need help starting an LLC in Louisiana, our legal team is here for you.
We make getting your LLC Louisiana fast and easy. We streamline every step of the process:
- Getting your new business EIN.
- Checking the availability of your business name.
- Completing the paperwork.
- Filing your paperwork with the Louisiana Secretary of State.
- Getting expedited service and fast turnaround.
- Advising you on the right way to set up your business and file your taxes.
Start Your Business Right to Help It Grow
Now that you know how to get an LLC in Louisiana, you can follow these steps yourself or call us for help.
Setting up your business the right way is the best way to start off on the right foot. Being legally compliant lets you grow your business. Contact us today if you need fast, easy processing of your LLC Louisiana. Visit our next page on forming an LLC in Maine.