You wanted to start a handyman business. You have worked out all the logistics, and you know the services you want to offer and how you will offer them. In short, your business model is ready. The next step in your journey is to declare yourself as a legal entity. If you are starting as a business, an LLC would be the best option. We know taking on legal work can seem overwhelming at first, but the process isn’t that hard. With our 5 tips for starting an LLC for a handyman business, you can breeze through the entire process without breaking a sweat. Declaring your business as a limited liability company (LLC) can lower your risk of a loss. That is because even if your business goes bankrupt, your assets like your car and house are protected. Furthermore, you can save money because you’re subject to lesser taxes.
The rules for declaring yourself an LLC vary according to the state of your residence. You can look up the rules and fees specific to your state on LLCStars.com. You can set up the LLC yourself with just the state LLC fee, or you can hire a firm to do it for you for additional fees. You can find good LLC formation services online.
Setting up an LLC by Yourself
Starting your LLC by yourself is by no means complex. All you have to do is take care of a few things.
1. Choose a Unique LLC Name
First, you need to choose the state where you’ll register your LLC. Then, you need to pick a unique name. You can search the internet to make sure the name is unique. Furthermore, you need to include LLC or “Limited Liability Company” in the name. You can’t include words that make it sound like you’re affiliated with the government, and if you want to use words like university, you’ll need a licensed individual to be part of the business.
“Coming up with a unique name for an LLC will set a business apart from its competitors. To create a memorable name, experiment with key terms in the field the business is a part of, names, acronyms, and more.” – David Reed, the Co-Founder of LLCStars.
2. Choose a Registered Agent
This registered agent will be the individual responsible for sending and receiving legal documents on your behalf. These legal documents include any court summons or state tax documents. You need to make sure that the person you appoint for this job is registered and a resident of the state you wish to operate in. Furthermore, we recommend appointing a person you trust and remaining involved in the process. Just as the registered agent can handle your legal affairs, they can ruin your business by going against the law or ignoring their duties.
3. File Formation Documents
To register your LLC with the state, you need to file formation documents, usually called the Documents of Organization. You can fill these out and hand them over to the state’s business department yourself, or you can have a service do it for you.
4. LLC Operating Agreement
Now, this isn’t a state requirement, but you’re probably better off getting it at this stage. The reason is that this document will help you avoid any ownership disputes that may arise otherwise. An LLC operating agreement is a document that explains how the LLC is structured and its operation model.
5. Getting an EIN
EIN stands for Employer Identification Number and functions the same way a Social Security number functions for you. Thus, you need an EIN to do anything from paying your employees to applying for a loan. The good news is that you can get this number from the Internal Revenue Service (IRS) website without paying anything.
Separating Your Personal Accounts From Business Accounts
You’re setting up your business as an LLC for limited liability. For that purpose, separating your assets from business assets is important. If your business account has your personal assets, those assets are at risk. In case of bankruptcy, you risk your money too. Consequently, you need to open a business account as soon as you start a business.
Remember when we said you needed to consider your state laws for starting an LLC? That also included looking into licenses and permits. Depending on your state, you might need specific licenses or permits to offer a service. We recommend completing this part before starting your business to avoid breaking any laws or paying fines.
Get General Liability Insurance
The LLC’s limited liability will protect your personal assets if you are sued, but you still need insurance for your business. Hence, you need general liability insurance. General liability insurance can cover your business’s assets if you get sued for personal injuries or other damages. Damages are a real risk as a handyman business, and if you don’t take measures to protect your business, you have a very high risk of going bankrupt.
A handyman business has a good potential for turning up profits. However, you do need to be careful which business model you choose. Choosing an LLC model will help you reduce personal risks and lower taxes. Thus, your business will grow more. The LLC status will also help your credibility, leading to more business. Setting up an LLC is not that difficult. With our help, you should have one set up without any issues. Just be sure to look up the relevant laws in your state, and you are good to go.