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In the era of social media, one might think that brand promotion is a piece of cake. In reality, many businesses fail to achieve the recognition they deserve and fall into obscurity due to bad advertising tactics and strategies.
If you want to enter the promotion market and help those struggling brands attract more clients, you need to start your own PR service. You can go small as a sole proprietor or a limited liability company, or you can go all out and form a corporation. In this article, we are going to focus on the lesser options and find out how your business would benefit from an LLC model. Let’s get started!
What is an LLC?
Starting an LLC in New Mexico provides a number of benefits to its owner. Its main strength lies in the name, providing businessmen with limited liability and separating their assets from the company. This makes LLCs similar to corporations, but they are significantly easier to create and manage, making limited liability companies closer to sole proprietorships in this regard.
How are LLCs taxed?
Taxes in USA is one of the most interesting aspects of forming an LLC. The Internal Revenue Service views LLCs with one owner as sope proprietorships and multiple-owner companies as partnerships. In both cases, all members receive their profit in full and then each of them pays taxes individually. This process is known as pass-through taxation and allows the owners to avoid getting taxed twice.
An LLC in New Mexico can also become a corporation (for the IRS only) which requires paying additional federal taxes but can save some money in the long run. However, it’s not a good choice for small-scale companies that don’t earn a lot of money.
Things We Like about LLCs
If you go with an LLC as the business structure of choice for your branding promotion service, you’ll enjoy quite a few benefits, such as:
- Limited personal liability;
- Easy registration procedure;
- Freedom of location;
- Brand name and customer trust.
Limited Personal Liability
LLCs in New Mexico allow their owners to protect their assets from lawsuits and debt collectors by separating them from the business. PR companies face all kinds of risks that can come from miscalculated advertising campaigns, misbranded products, questionable affiliations, or even a single social media post. Losing property in an overhyped court case is brutal, and the limited liability model is specifically designed to prevent you and your partners from going broke in an instant.
Easy Registration Procedure
An LLC gets another point for being relatively cheap and easy to register. You need to file a formation document called the Articles of Organization with the Secretary of State, choose a registered agent for business correspondence, get a federal tax number (EIN) if you plan to have employees, and then just wait for the approval. Price-wise, you’re looking at the range of $40-500 depending on the state.
There’s an even easier way to start an LLC. You can hire a business formation company and just let it do its magic. For example, services like ZenBusiness or IncFile can help you create an LLC and become your registered agent for a year for less than $100.
Freedom of Location
You don’t have to be physically present in the territory of the state where you’d like to do business. The only requirement is a legit street address for business correspondence, but this problem can be easily solved with a dedicated service (see above).
Brand Name and Customer Trust
Unlike sole proprietorships that are registered under your birth name, LLCs can be legally called whatever you like. Also, the customers tend to trust businesses with formal entity tags a bit more. So, say goodbye to “John Smith Company” and meet “Millenium PR LLC”.
Things We Don’t Like about LLCs
It’s not all sunshine and rainbows for LLC owners who generally suffer from the following inconveniences:
- Management limitations;
- Investment roadblocks;
- Annual reports.
Management Limitations
If you want to add or remove a member from the company, you’re in for a bureaucratic adventure. At the very least, you will need to amend the official documents, or in some cases, register an LLC all over again. Furthermore, it’s difficult to pass a part of the ownership to current members similar to corporate stock as limited liability companies have no such thing.
Investment Roadblocks
The inability to buy and sell stock negatively affects investment opportunities meaning that you can’t get funded by people from the outside. If you dream of becoming a global marketing powerhouse and luring big-time investors, you should probably go for the corporation model.
Annual Reports
We hate annual reports as much as the next guy, and most states even charge filing fees for them. We guess it’s a fair price to pay for keeping the good standing with the local authorities because your reputation is all that matters at the end of the day.
Is it necessary to open a separate bank account for an LLC?
A corporate bank account solves a couple of problems. First, it shields the owners’ personal capital from the company’s money. Second, it allows you to manage all incoming payments and pay salaries to each employee including yourself.
Conclusion
The general rule is that if a business involves any risks, you need to have limited personal liability to keep your property intact which is exactly what an LLC does. We’ve seen enough PR campaigns go wrong to realize how potentially dangerous this market is, so an LLC is an obvious choice here.
