Many consultants prefer to operate an LLC than be a sole proprietor or a corporation owner because these entities combine many of the advantages of the other two entities. If you run a small operation and want to protect your assets, this is likely the best legal structure for your consulting business.
Do I need to form a company to be a consultant?
Your consulting firm will need a legal form, such as being a sole proprietor, partnership, LLC, or corporation. “However, if you plan on setting up a team or you have personal assets that you want to protect, an LLC might be right for you.”
When to form a LLC ( Limited Liability Company )?
Limited Liability: This is perhaps the biggest attraction of an LLC (keep in mind that you get limited liability protection from a C-Corp and S-Corp too). This means that you can generally protect your personal assets if there is litigation or bankruptcy of your company. Granted, this is not absolute.
Where can I find out more about forming a LLC?
LLC’s are regulated by state laws. Go to your state’s Secretary of State division and look for the Business section to find out more about starting an LLC. The information in this article is intended to be general and not to be tax or legal advice. Every business situation is specific, and laws may change.
When is the effective date for a LLC?
If you don’t need your LLC open right away, we recommend using a delayed effective date of January 1st of the following year. If your state doesn’t allow you to use a delayed effective date, then just wait until January to form your LLC.
Can a LLC go into existence 90 days ahead?
In most states though, you can make your LLC go into existence in the future (typically not more than 90 days ahead). This is most often referred to as using a “ delayed effective date “. If you tell the state to give your LLC a delayed effective date, your LLC will go into existence on that date.
