If you’re starting a nutritionist business, you may be pondering your business entity options. Many new entrepreneurs choose to form a limited liability company (LLC) because of the personal liability protection and pass-through taxation that an LLC offers. Opening an LLC involves filing a document with the state, but there are several other steps involved that you should be aware of.
In this guide, you’ll find details about all the steps to follow to open an LLC for your nutritionist business.
Choose Your LLC Name
First, you’ll need to select a name for your LLC. You should cha PayPal business accountoose a name that’s unique and easy to remember, but you’ll also need to ensure that you follow your state’s LLC naming regulations. Every state has its own guidelines for LLC names, but in general, your name has to contain the words “limited liability company” or one of its abbreviations such as LLC or llc. Words like bank and university also generally cannot be used without state approval. Check with your state for requirements.
Once you have a name that follows state rules, you’ll need to make sure it’s available. First, you’ll simply need to do a business name search on your Secretary of State’s website. Next, you’ll want to check the United States Patent and Trademark Office website to ensure that your chosen name is not nationally trademarked.
Finally, check a site like GoDaddy to ensure that the domain name you desire is not in use.
Select a Registered Agent
Almost all states require that you appoint a registered agent for your LLC, which is a person or business authorized to accept official correspondence for your LLC. You can elect to be your LLC’s registered agent, but by doing so, you’ll be required to be personally available at your registered address during regular business hours, which can prevent you from going to client meetings.
For that reason, many entrepreneurs choose to utilize the services of a registered agent service. A registered agent service will accept your correspondence, notify you, and make documents available to you online.
The average cost of a professional registered agent service is about $150 annually.
Determine Your Management Structure
The owner or owners of an LLC are called the members, and your LLC can either be member-managed or manager-managed. If you’re starting your nutritionist business on your own, presumably your LLC will be member managed by you. Member managed means that ALL members of the LLC are actively involved in the business.
In a manager-managed LLC, not all members are necessarily involved in the management of your nutritionist business and may instead be passive investors, while other members are appointed as managers. With a manager-managed LLC, you can also choose to appoint a non-member as a manager of the LLC.
The managers of an LLC have certain powers, such as signing contracts, obtaining financing, and handling bank accounts, so choose your managers wisely.
Register With Your State
Now it’s time to formally register your LLC with your state. In most states you can do this online on the Secretary of State’s website by filling out a document which is usually called the articles of organization but may be called a certificate of formation or a certificate of organization.
The form generally requires the business name, address, and the registered agent name and address. In some states it will also require your management structure as well as the names and addresses of managers.
Most registered agent services also offer business formation services, and handle the document filing for you for an additional fee.
Create an Operating Agreement
An operating agreement defines the ownership percentages of your LLC, how profits are allocated and distributed, and the roles and responsibilities of managers or members. It also specifies the voting rights of members and how disputes are resolved. Many other provisions should also be included.
Unfortunately, many entrepreneurs skip this step, but by doing so they open themselves up to potential issues that could end up in court. An operating agreement is a binding legal document that can settle disputes and cannot generally not be legally challenged.
It’s critical to have this document in place, even though it’s not required in most states. Even if you are the lone member of your LLC, the operating agreement will specify how you can add a member if you choose to partner with someone in the future, and what happens to the LLC if something happens to you.
The bottom line is that this step should not be skipped, even if you’re the only owner of your nutritionist business. It’s best to have your operating agreement drawn up by an attorney to make sure that all bases are covered.
Obtain Business Licenses and Permits
You may need business licenses and permits at the state and local levels. You may need a professional license as a nutritionist or dietician depending on your state’s requirements. You’ll also need to check to find out if nutritionist services are subject to sales tax in your state and acquire a sales tax permit.
Insure Your Business
You’ll want to have a detailed conversation with your insurance agent to find out what kinds of insurance might be appropriate for your business. They will likely recommend general liability insurance, which covers you in a variety of situations, and professional liability insurance, which covers damages resulting from an error or omission in your work.
Apply for an EIN
You’re required to obtain an employer identification number (EIN) if your LLC has multiple members or if you have employees. An EIN simply allows the IRS to identify your nutritionist business for tax purposes. It’s free to apply on the IRS website.
Open a Business Bank Account
Opening a business bank account enable you to keep your business and personal finances separate, which will make your accounting and taxes much easier for you. You’ll find out that for yourself when you file your first 1099k tax form. Most banks offer business bank accounts, so check with your local banks to see what they have available. You might be required to bring a copy of your LLC formation documents and your EIN. Consider linking your business bank account to a PayPal business account for added flexibility in managing transactions and facilitating online payments seamlessly. Opening both accounts can streamline your financial processes and enhance your business operations.
Conclusion
An LLC is a great choice for your nutritionist business. It takes some work to get it fully set up, but the personal liability protection alone makes it worthwhile. If you need help, consult with your attorney or turn to a business formation service to help you through the process. You’ll want to ensure that everything is done correctly, so you can focus on helping your clients and growing your business.