The LLC Acronym

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The LLC Acronym

If you’re interested in starting a business, it can become overwhelming differentiating the various business structures and determining which is the best fit for you.

The Limited Liability Company (LLC) is one of the most common business structures used in Iowa. The LLC structure is appropriate for a simple business with one owner to a more complex business with several owners. It offers the owners protection from personal liability for debts and claims.

If you’ve decided a LLC is the right structure for you, you may ask, “Now what?” In the preliminary stage, I tell clients to follow the LLC Acronym.

              Limit your liability

              Lease and location

              Company name

Limit your liability

Before doing any business, I always advise people they should operate under some sort of business structure. Your liability is not limited until you do. Take, for example, a landlord and his two brothers who own an apartment complex. Five tenants move into the complex. A week later, a tenant falls and breaks her leg on the property due to poor maintenance. If a lawsuit ensues, the landlord and his brothers’ personal assets are at risk. However, an LLC business structure would have protected those personal assets.

An LLC is formed by filing a certificate with the Iowa Secretary of State, along with the $50 filing fee. An attorney can assist in drafting a certificate with the proper information and filing it with the state.

Lease and location

The location and lease go “hand in hand” as both must be fit for the purpose of your business. I always advise people to carefully calculate the costs of transforming the location before signing the lease, as unexpected expenses may arise. Licenses, permits, and ordinances are important considerations. For example, if the business is a restaurant, have the grease trap inspected to determine whether it is compliant or must be replaced. If you plan to change the signage, check city requirements first. Most attorneys are willing to sit down and review leases as an unbundled service.

Company name

You cannot have the same business name as another business. This is actually the first thing you should do before starting any business. It is unfortunate to choose a name, order inventory and print the name on products or clothing, only to realize that you cannot use the name. Your attorney can check the availability of your company name.

It is beneficial to have an attorney assist in starting a business. These preliminary stages only scratch the surface. Operating agreements, annual minutes, and biennial reports — the next steps to take once you have a business, are important and can be complex. Call me at 319-260-2096 if you have further questions about starting a business or if I can be of assistance in the process.