Learn the leading business finance tips that will grow your business and help you succeed…
If you’re a small business owner, you’ve probably thought about expanding your business at some point. For many business owners, that means going from a sole proprietorship to an LLC, which is a big undertaking. You don’t have to figure everything out on your own, though. A small business accountant can provide services beyond bookkeeping that will help you expand your business.
Before discussing how a small business CPA can help, let’s discuss what it means to go from a sole proprietorship to an LLC and how to do it.
Sole Proprietorship vs LLC
If you have not filed any business paperwork with the state, you are operating as a sole proprietor. This means that you are the only employee and there is no distinction between the business and you, the owner. You are entitled to all profits and are responsible for any of the business’s debts, losses, and liabilities. While this is the simplest business classification, it can place a heavy financial burden on you because you alone are responsible for the business.
A limited liability company (LLC) separates you from your business, removing the heavy financial burden. Many businesses operate as LLCs because it gives you the flexibility of a sole proprietorship, but provides much more protection.
Changing From a Sole Proprietorship to an LLC
- Choose your business name, making sure there isn’t already a business with that name in your state. Most states have an online database you can search. North Carolina’s database can be found on the Secretary of State website.
- File Articles of Incorporation with your state government office. This document contains information like the name and address of your LLC, your LLC’s purpose, and an indication of your management.
- Create an LLC operating agreement. This is an official contract that details the management and ownership of the LLC. It usually contains details like how much of the company each member owns, everyone’s voting rights, how profits and losses should be distributed among the members, and what happens when a member wants to leave the business.
- Register with the IRS and obtain a new employer identification number (EIN). You will use this for opening business bank accounts, filing taxes, and processing payroll.
- Open a new bank account for your LLC. If you had an account for your sole proprietorship, it is recommended that you close that account and open a new one.
- Apply for any permits or licenses you need. Depending on your business, these may include a professional license, reseller’s permit, or health department permit.
How a Small Business Accountant Can Help You Grow Your Business
While most people think of small business accountants as bookkeepers, that couldn’t be further from the truth. At Carson Thorn, CPA, PLLC, we provide a range of services for business owners including filing for a federal tax ID, payroll services, tax reporting, and much more!
If you’ve only done business as a sole proprietor, operating an LLC and managing employees will be a new challenge. Having an experienced small business accountant on your side will give you peace of mind and allow you to focus on running your new business. We provide a variety of financial services to businesses in the Raleigh area. Learn more about how we can help you make the move from sole proprietorship to LLC by calling us at 919-420-0092 or filling out our contact form to schedule an appointment.