Digital Dominance: A Guide to Forming Your Digital Marketing Business with an LLC

When you launch a new business venture, you naturally want to do everything within your power to establish long-term success. One of the best ways to position your new digital marketing business is by selecting the right legal structure. Specifically, registering your digital marketing business as an LLC can help you mediate risk, promote efficiency, and enhance credibility.

As such, it’s worthwhile for digital marketing entrepreneurs to learn more about what an LLC is, how it works, and how to start one. Here’s a crash course guide.

LLCs: Understanding the Basics

Any time you launch a business, it has some kind of legal classification. This may be LLC, Sole Proprietorship, Partnership, or Corporation.

Since the 1970s, the LLC, or Limited Liability Company, has become one of the most popular options for entrepreneurs across the country, in virtually every industry. One reason for this is that, when you register a business as an LLC, you establish a whole new legal entity. Your LLC is its own distinct thing, with assets and liabilities all its own. This isn’t so with Sole Proprietorships and Partnerships, where there’s basically no legal separation between the business and its owner.

Meanwhile, running an LLC involves a lot less administrative and regulatory oversight than Corporations. You don’t have to sell shares, hold annual stakeholder meetings, or create comprehensive financial reports. 

Simply put, LLCs offer a flexible and manageable option for structuring your digital marketing business. For most digital entrepreneurs, the LLC format will represent a sweet spot between the rigors of incorporation and the laxity of Sole Proprietorship. 

The Benefits of the LLC Structure

As you consider registering your digital marketing business as an LLC, it may be useful to know some of the primary benefits.

1) Wealth protection.

One of the primary reasons why entrepreneurs choose the LLC format is that it allows them to keep their business assets and liabilities in one pot, their personal assets and liabilities in another.

What does this mean in practical terms? Basically, it means you can keep your personal finances completely off the table when litigation or aggressive creditors strike. In other words, you can invest in your business with relative peace of mind that your family’s savings and your retirement accounts are safe and secure.

2) Enhanced credibility.

Anyone can start a business, but not just anyone can register as an LLC. There are certain legal steps you’ve got to take to establish a new business entity. As such, obtaining LLC status is a real sign of professional seriousness and credibility. It shows that yours is a “real” business, not just a hobby or something you’re doing on the side.

This enhanced credibility is invaluable as you seek to earn the trust of potential customers, partners, or investors.

3) Administrative flexibility.

Another benefit of the LLC format is that it allows you to make some meaningful decisions about how you’ll run your business.

When you launch your LLC, you’ll have a chance to create an Operating Agreement, which functions as a kind of charter for how the business operates. You can determine how you’ll split managerial functions between different partners, and how you’ll divide profits. You can even elect to bring in a third-party management team. There’s a lot more flexibility than what you’d get with a Corporation.

4) Tax flexibility.

When launching a new digital marketing business, one of the main considerations is how you’ll report to the IRS. Here again, the LLC format provides the benefit of massive flexibility.

The default position is pass-through taxation. This means declaring profits and losses on your personal tax return, and paying at your normal tax rate. You can also elect to pay a corporate tax rate, should you determine that to be a more advantageous option.

Moving Forward with LLC Registration

Clearly, there are some compelling reasons to pursue LLC registration for your digital marketing business. The question is how.

When it comes to registering an LLC, the requirements can vary by state. In other words, the requirements to form an LLC in Florida are a little different than the requirements to form an LLC in, say, Nevada. With that said, the process usually follows a few familiar beats.

• Choose the right name. Your LLC needs a name that is original, which is to say, not in use by another LLC in your state. Most states offer searchable directories, allowing you to ascertain whether your desired name is still up for grabs.

• Appoint a Registered Agent. You’ll need either an individual or an institution to formally accept legal and tax correspondence on the LLC’s behalf. Make sure it’s someone who has a physical mailing address in the state where you’re registering your digital marketing business.
• Create an Operating Agreement: This document is a kind of charter for your digital marketing business, denoting how you’ll divide profits and managerial duties between different partners. Having this document can help you circumvent legal disputes later on.
• Decide Between Sole Proprietorship and LLC: Before proceeding further, it’s crucial to understand the distinctions between a sole proprietorship and an LLC. For instance, while a sole proprietorship provides simplicity and ease of setup, it lacks the liability protection and credibility that an LLC offers. An LLC, on the other hand, offers personal liability protection by creating a separate legal entity. For a detailed comparison of the pros and cons of each structure, refer to this comprehensive guide on the differences between sole proprietorship vs LLC.
• File Articles of Organization. This is the document you’ll need to officially register your LLC. Note that when you file with your state, you’ll also need to pay a registration fee, which may be anywhere from $15 to $300.

• Get an Employer Identification Number. You’ll need an EIN before you can process payroll or file income taxes. Claim one for free (assuming you’re a US resident) from the IRS.

• Set up an LLC bank account. Be sure your business bank account is disconnected from any personal checking or savings accounts.

Pursue Digital Marketing Success

To ensure long-term success for your digital marketing company, choosing the right legal structure is a must. Consider the LLC as your best bet for lasting impact.