Think you’re ready to set up shop with your new SEO agency? Not so fast. There are some important back-end decisions that are easy to overlook, especially for first-time entrepreneurs. One of the most consequential decisions of all is how you’ll structure your agency from a legal perspective.
There are several legal structures to choose from, ranging from the simple Sole Proprietorship to a full-fledged corporation. For smaller SEO firms (and really for small businesses in general), the ideal option is usually the Limited Liability Company, or LLC.
What is an LLC?
Before we get into the mechanics of setting up an LLC, it may be helpful to provide a working definition.
Registering your company as an LLC allows you to establish a separate legal entity. Unlike Sole Proprietorships, where the business and the owner are interchangeable, the LLC allows you to maintain a clear line of distinction between what belongs to you and what belongs to your company.
This provides a lot of important benefits, including the ability to safeguard your personal assets from litigation. Additionally, LLCs are flexible, they convey credibility, they come with built-in fax advantages, and more.
Registering Your Agency as an LLC
So what’s required for establishing your SEO company as an LLC? The process can vary from state to state. For instance, here is a guide for forming an LLC in Texas. In Florida or Wyoming, the requirements might look slightly different. With that said, here’s a general outline of the LLC formation process.
Choose the Right Name
What’s in a name? Well, quite a bit, actually. The name you select for your agency will naturally affect marketing and branding efforts. But there can also be some legal implications.
Specifically, you’ll need to choose a name that isn’t already in use by another LLC in the same state. Luckily, most states offer a searchable online directory, providing an easy way to verify that our desired name is still up for the taking.
Appoint a Registered Agent
This is an absolute requirement for all LLCs. Your Registered Agent:
- Is tasked with receiving all legal and tax documents on the LLC’s behalf.
- Can be either a person or an institution.
- Must have a physical mailing address in the state where you’re registering.
Note that in some states, you can serve as your own Registered Agent, though it is far more common for LLCs to outsource to third-party Registered Agent services.
Create an Operating Agreement
Think of your Operating Agreement as a charter, a rulebook for how your SEO agency will be run. It might cover such topics as:
- How you and your partner(s) will split managerial duties.
- How you and your partner(s) will allocate profits.
- How you will deal with the departure of a partner.
- How you will bring in new partners.
You don’t necessarily have to have an Operating Agreement, but it’s strongly advised. These documents can potentially help you avoid a lot of legal conflict down the road.
File Articles of Incorporation
Your Articles of Incorporation is the document you’ll file to officially register your SEO company as its own distinct legal entity.
Different states require different information in your Articles of Incorporation. Typically, you’ll be asked to provide details like:
- The scope and purpose of your company.
- The names of all partners.
- The contact information for your Registered Agent, including mailing address.
Also be aware that filing with the state means paying a small LLC registration fee. Depending on the state you’re in, this could be anywhere from $15 to $300.
As for the timeline, most states handle LLC approvals within two to four weeks. You can likely request an expedited timeline, for an additional fee.
Get an EIN
EIN stands for Employer Identification Number. It’s almost like a Social Security Number, except it’s for the business and not for a person.
You won’t necessarily need your EIN right away, but it’ll be necessary before you file taxes or administer payroll.
Thankfully, claiming your number is easy. You can request it from the IRS, and for US residents it’s free of charge. There is usually not a wait time for EINs.
Establish Your Banking
You’ll also need to make sure you have bank accounts set up, allowing you to receive payment from customers and to process payments for your different vendors and partners.
The most important thing to remember is that you need a bank account that’s exclusively for your business, not attached to any personal checking or savings accounts. This is critical for maintaining separation between your personal and business affairs.
Keep Up with Compliance
There aren’t a lot of steps you have to take to maintain regulatory compliance for your LLC. The low regulatory burden is one of the main reasons why small business owners are attracted to this business structure. With that said, there are a handful of things to keep in mind:
- You’ll need to file a report with the state each year.
- You’ll need to alert the state if you change Registered Agents.
- You’ll need to alert the state if your Registered Agent changes contact information.
- If you’re registered in California, you’ll need to pay the annual LLC tax (currently set at $800).
Get Started with Your LLC Today
LLCs provide a meaningful way forward for SEO startups. Choosing this legal structure may provide you with the safeguards you need to ensure long-term success. Take the first steps toward registering your LLC today.
