By Hipolito Navarrete, Managing Editor/Publisher
The formation of a Limited Liability Corporation is the beginning of a stressful journey that can lead to bankruptcy, lost relationships, loss of confidence and total denial of a dream that you have had since you decided that what you want to offer the world would be the most awesome opportunity that they could discover and bring into their lives. Many businesses fail at the beginning because the founders were not prepared for all of the obstacles and negative responses that come with selling products or services.
There is a huge difference between offering a service or a product for folks to try for free and those that need to charge for it so that they can make sure they can pay their bills and especially those human resources that are going to be necessary for the business to sustain and escalate. However, look around, there are many businesses opening every year, every day and many of these successfully support the families that they were intended to support over a lifetime. Do you have the ability to sustain yourself for 3 years? Can you live on the minimum? Do you know how much you need to live on per month? This is important.
In California, once you have decided to send your LLC -1 to the Secretary of State in Sacramento, http://www.sos.ca.gov/business-programs/business-entities/forms/, attaching the $70 dollar fee, you will receive a letter acknowledging the registration of your LLC. You must then follow with the LLC-12, $20, in order to get the EIN or Tax ID number for your business. With this number you will be able to open a bank account and you will be able to now conduct business in the state. You will also need to set aside $800 for taxes for the year in case you do not complete any transactions. You must make sure that you can pay the taxes necessary. If you can, you should, consult a lawyer to make sure there are not any issues that could cause a problem for your type of company. The small business administration, https://www.sba.gov/, may have some seminars close to you that can help you understand some of the structural challenges that you may find in dealing with government also you can also call the Board of Equalization, http://www.boe.ca.gov/, if they can’t answer your questions, they may be able to point you in the right direction. Once you send in your LLC-1 and LLC – 12, make sure you follow up with the Federal Tax Bureau so you can request an Employment ID Number, or IEN, https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online, and start looking for a CPA that can make sure you pay your business taxes accurately.
Although you can go at it alone, it is important that you create a team or partner with others so that you have a range of talents to consult as you encounter challenges that you may have no experience with. Don’t focus on the money you can make, focus on the folks that would be purchasing your services or product. Be transparent and honest with them. Who needs your product, why and how much are they willing to pay?
The launch of a small business from using a DBA to forming an Corporation (INC.) comes with a lot of requirements to make sure it survives and thrives, it is a risk that is fraught with many challenges and also many opportunities. It is an opportunity to find your way in a world where many people search for the comfort of a steady paycheck that balances their needs and their longings. Some are not okay with that… So entrepreneurship is their calling.