Creating the business (part 1)
Updated: Dec 20, 2019
Apprehension caused me to take a path in starting the business in a way that I would not do again. A friend had started a business creating affordable websites for smaller organizations, like non-profits, small businesses, and public education systems. She had used a California based legal document company to set up her LLC and was pleased with the ease, convenience, and affordability. I, however, was about to find out that in the five years since she had started her LLC that quality of service has changed dramatically. Knowing what I know now, I would not go down that road again, nor would I recommend it to any others.
With that in mind, here is my story about my experience. It all starts with some simple web-based forms with the basic information you would need for an application for nearly anything on the planet. I did not choose anything fancy, just the simplest sole proprietorship Limited Liability Company (LLC) that you can create. I even decided to form the LLC in the state in which I reside. You can create your company in basically any state within the United States if you choose to do so, for reasons that get complicated.
So I pick a name for the LLC as part of the initial information, and this is where things start to depart the easy path in my experience. A day or so after completing all to required information, I get an email stating that the name I had picked does not meet the requirements for uniqueness for the state. I can understand that this was possible; I had chosen a single word that seemed relevant to what I was going to be doing with the business. The email suggested that I submit three more for consideration, and I replied with three new ones. Again, nothing too crazy, and they were mostly synonyms for the word I had initially selected. Guess what, less than 24 hours pass and I get the same email stating the names I submitted did not meet the uniqueness criteria outlined by the state. Now I am getting a little frustrated, granted I was trying to keep the names short and sweet, but what was the likelihood that I had picked seven different names that were already in use in a state that does not have a substantial population? Time for the first phone call.
So I call customer service. Overall, not a bad experience, but the devil once again is in the details. During the conversation, it became painfully clear that the messages I was receiving had absolutely no human in the process. So no one at the company had actually contacted my Secretary of State's (SoS) office in trying to create this business. The company had clearly taken a few guidelines off the SoS website and turned them into an algorithm for a computer to digest and regurgitate answers. Bear in mind, these are guidelines and not rules and are subject to interpretation by humans. The fact that these are guidelines and not rules, however, is not something this company had factored into the algorithm or even their business model. It would be easy to have their system flag such an event for follow up by one of their humans, rather than pinging me repeatedly for what turned out to be a false assumption. So I tell them that I am going to follow up with my SoS office to get this issue reconciled.
Now on to my SoS office for what turned out to be less than five minutes on the phone including a brief on hold while I waited for "the next available associate" to field my call. Guess what, the very first name I had chosen was available and did not violate any of the uniqueness guidelines. So I call the company back to explain the results I received by actually speaking to someone at the SoS office and for them to proceed with the original name I provided.
A few weeks pass, and then I get a package in the mail. Inside, a couple of advertisements and this nifty little box with the LLC name on it and a three-ring binder within. It has numerous documents, some of value, others would qualify as filler under most circumstances. It even included an embossing stamp. I have only seen these things used in a limited number of situations in one of my previous lives. Those situations were on contracts involving a pile of money and were proof of an original document, given the state of full-color photocopying these days.
So, now that I have an LLC according to the state, I hit the IRS website to get an Employer Identification Number (EIN). The EIN is just a Social Security number for the business so that Uncle Sam knows this business exists. Of all the processes in this chain of events, this is the easiest by a long shot. Five minutes on the website, again for some basic information, and then hit print. Very Important as there is no way in that system to recall what you have done.
Now we move on to my State's Tax office to register with them. The company asked me to fill out the form for the State tax office, which I did promptly, and then about six weeks later I get a notice from the State tax office that they received notification that I might be operating a business without a license. The SoS office automatically notifies the state tax office. It turns out that because of the weeks worth of delays I experienced with the name issue my paperwork hit the State tax office at the peak volume of when people are creating new businesses, January. So, they had my paperwork, and it just hadn't been entered into the system yet.
To be continued here.
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