Year’s End is the Best Time to Start an LLC

By admin, December 3, 2016

 

There is just something about the end of the year that stirs a desire for change and self-betterment for the next calendar year. Many people view January as a clean slate. And so do businesses. January puts people in a rejuvenated, motivated, and focused state of mind. You may feel emboldened to follow through on certain goals or vision statements that you’ve dreamed about for some time, like filing as an LLC for instance.

 

Maybe you want to finally turn your sole proprietorship or partnership into a Limited Liability Company. You know the benefits that making this switch and filing as an LLC can bring. This year-end rush of confidence may be the push you need to make it happen for your business at last.

 

A lot of businesses seek to have their legal formation date at the clean-cut January 1^st.   But people are often lazy, and wait until the beginning of the year to make a mad rush to get their LLC incorporated. Exercising a little discipline and forward-thinking, you can get ahead of the game by starting the LLC process at the end of the year, rather than waiting until January. This can also be a great way to stay organized, by providing your company with some end of the year accounting.

 

1. Be Effective January 1^st

Even when you opt to begin the LLC filing process in November / December, most states allow you to select a “future effective filing date” by adding a provision on the formation document. Thus, even if you get ahead of the curve by filing today, the state will still recognize January 1^st as the date of formation if you wish.

 

2. January 1^st Makes Accounting “Cleaner”

A beneficial reason to make January 1^st your effective filing date is because it helps make bookkeeping much more neat and clean for keeping track of. This makes the job of your company accountant much easier when separating the finances between the calendar and fiscal year for the company.

 

3. Benefits of LLC

Of course, one of the big benefits of filing as an LLC is how it limits your personal liability. The taxes for your business are less complicated than a formal corporation can be as well.

 

4. Alleviate State Filing Worries

The end of the year is when most states require you to file a return. If you jump the gun and make your LLC filing effective “before” January 1^st, then you may be expected to file a return or pay taxes on it at the year’s end, even though you haven’t had the opportunity to do much with the business at all. By making your filing effective January 1^st, you may not have to concern yourself with state filing until the end of that year.

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