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5 Things I Wish Id Known Before Starting an LLC by Chaunie Brusie

can an accountant set up an llc

As an accountant, you might already know your way around taxes, but we will go through the important ones anyway. Long story short, we suggest you have an accountant when forming llc bookkeeping your LLC, and we’re going to show you how to find the perfect one. This also means that the LLC does not record any tax credits, since there is no tax liability to offset them.

Otherwise, you will no longer be qualified to own and run a professional corporation. In our view, questions that involve taxes and accounting are for a C.P.A. or a qualified accountant. Problems can arise when your attorney isn’t willing to send you to the accountant for tax advice. Likewise, accountants don’t necessarily consider the risk to your LLC from legal proceedings. As with most types of businesses, the general ledger forms the accounting foundation of an LLC.

Requirements for California Articles of Organization

Understanding the benefits and disadvantages of an LLC, how to start an LLC, where to form your LLC and other key topics is essential for business success. To help minimize their risks, licensed professionals can obtain professional liability insurance. In fact, some states even require PLLCs to have these types of malpractice insurance.

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PLLCs still get some degree of limited liability protection as the members involved might not be liable when the company is sued or owes debt. However, members of the PLLC are still liable for their own malpractice or professional negligence. Thus, professionals can still enjoy some benefits from registering their business, but they are not totally protected by the registration. S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums. If your LLC has multiple owners, the IRS will treat it as a partnership. Each owner must pay taxes on their personal income tax returns based on the profit share they own in the LLC.

Business 101

Each state has different requirements for forming a limited liability company (LLC). Whether you are starting a business or incorporating a business already in existence, you’ll want to understand the California LLC formation requirements. When it comes to how to start an LLC, there is a lot for small business owners to think about beyond “what is an LLC” — from liability and taxes to LLC business management and more.

You have to update your company details to the state by the 15th day of the 4th month of legal formation. It’s due each year on the 15th day of the 4th month of your tax year. Yes, you can be your own registered agent, but you must use a physical street address in California (not a P.O. Box). The downside is that you lose the privacy aspect since you may list your home address. The upside is you avoid an additional fee paid to a registered agent service.


Therefore, owners cannot typically be held personally responsible for the business debts and liabilities. A PLLC is a special type of LLC that is designed for licensed professionals. However, this is strictly a state-by-state basis as different states have different requirements for professional entities. Some states allow PLLCs, some states allow licensed professionals to form LLCs, and some only allow professional corporations. A limited liability company (LLC) is a popular way of setting of a business because it allows the owners to limit their personal liability for actions taken by the company.

Do I need an accountant for a partnership?

Whether you run a business as sole trader, a private limited company, or a partnership, you are under no legal obligation to use an accountant, unless your company requires an audit.

The members, or owners of the LLC, are protected and their personal assets are not at risk when the LLC received financial obligations and debts. An accounting firm needs an office, furniture, hardware, and accounting software. You will also be required to become a certified public account (CPA), which requires you to sit an exam that generally costs around $1,000. For accountants working from their home, this insurance will cover any damage or destruction that occurs to the areas used for business.

How to Find a Good CPA/Accountant

However, it is also often used for other important business activities, such as opening a business bank account, obtaining a loan, or paying invoices. A registered agent (also often referred to as agent for service of process) is a person or business you appoint to receive and forward to you important legal and tax information. California requires a registered agent to incorporate and the business must maintain a registered agent throughout its existence.

can an accountant set up an llc

And according to estimates, there were close to 21.6 million LLCs operating in the U.S. in 2021. Depending on the size of your business, you can either customize a free or premium template or consult https://www.bookstime.com/articles/bookkeeping-for-shopify-sellers with an attorney. If you answer “yes” to any of the questions, then you’ll need an EIN. Since the local SOS offices are pretty busy, they also introduced a two-step expedited fee scheme.

What is the processing time to form an LLC in CA?

Troubling to us was the fact the new accountant seemingly thought he knew about risk, liability, and the courthouse. When the risk plan was set up, the client used a different accounting firm. We had discussed the tax considerations as well as the risk of liability issues. Following several phone calls, meetings, and e-mails, the collective agreement was to go forward with the strategy giving legal liability the priority over the tax considerations. Getting advice from an expert can give you important information and details about the filing process. At StartGlobal, we’re here to make your first steps easier and save you from costly mistakes.

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