Have you ever thought about legally creating your business but kept putting it off because you were afraid it’d cost you thousands of dollars through the services of a lawyer? 

For years, I operated my speaking business as a sole proprietorship but without bringing it into existence as a legal entity.  I figured since I was a one-man operation, why spend untold thousands just to process some legal paperwork?  

There had to be a better way.

One day, I decided that I needed to send a strong message to the universe that I was serious about treating my speaking career as a business, not as a hobby.  That meant I needed to form a company. 

But how to pull a sole proprietorship into a legal entity so that my personal assets could be kept separate from the business and accomplish it without a lawyer?    

Here’s how I did it and how you can too:  

• First, select a name that is both eye-catching and appropriate.  I already knew I wanted to call my speaking business ”Obstacle Illusions.” 
• Decide what type of legal entity you want to create.  After much research, I decided that it would be much easier to form a limited liability company.  After all, I could always “upgrade” the business to a corporation once I started hiring employees and expanded in both scope and size.  See Selecting Your Business Entity Legal Structure for additional information.
• Check to see if the name of your company is legally available.
• Fill out an “articles of incorporation” form and mail it in to the Secretary of State’s Office with a check for the filing fee.
• Fill out a Tax ID form and send it in to the IRS.
• Open a business checking account at your bank.
• You’re DONE!

4 ADVANTAGES OF A LIMITED LIABILITY COMPANY 

• No complicated legal requirements such as issuing stock certificates, holding annual meetings or having a board of directors and recording the minutes of the meetings, etc.    
• Your personal assets are protected from all claims against your company in a lawsuit, should one ever happen.
• Unlike a corporation, you won’t be double-taxed.  Profits and losses flow directly from the LLC to you.  
• Gives you creditability in the eyes of potential clients.

ENSURE THE NAME YOU WANT ISN’T ALREADY TAKEN BY SOMEONE ELSE

Once I decided that a LLC was the right vehicle for me, the next step was to check and make sure that no one else had “Obstacle Illusions” in the state of Ohio.  I used two free resources to check on its availability:

• American Incorporators has a free service where they will check up to two potential names for your LLC in any state.  Go here to fill out the online form.  You will get an email from them within 2 or 3 weeks indicating whether or not the names you want are available in your state.  If you’re worried that this company will use your email address to spam you with a blizzard of advertisements, use an alternative email address that you use for such purposes (i.e. create a free Yahoo or Hotmail account) .  I personally did not experience any such behavior from them, so you can rest assured that once they send you a response, they won’t bother you after that.    
• You can also go to your Secretary of State’s website and conduct a name search.  Use Google to find its location (i.e. ”Ohio Secretary of State”).   On the main page, look for something that resembles “search for business filings” and follow instructions.  

Between these two of methods, you’ll know for sure whether your chosen business name is available in your state.   Lawyers will charge you to do the same thing that you can do for free!     

DOWNLOAD, FILL OUT AN “ARTICLES OF INCORPORATION” FORM AND MAIL TO THE SECRETARY OF STATE’S OFFICE WITH A CHECK 

Once you know for sure the name is available, the next step is to fill out an Articles of Incorporation form from your Secretary of State’s website.  Go here to find links for your state. 

The amount of the filing fee will vary from state to state but in Ohio it was only $125.  Two months later, I received a State of Ohio Certificate that basically read:

It is hereby certified that the Secretary of State has custody of the business records for Obstacle Illusions, LLC and that said business records show the filing and recording of Articles of Organization…….

If you decide to open a business checking account, your bank will check the Secretary of State’s website to verify that you are legally established within your state.  

OBTAIN A FEDERAL TAX IDENTIFICATION NUMBER FOR YOUR LLC

Download the SS-4 from the IRS website, fill it out online and then print out a copy to mail to the IRS.  In section 10 (“Reason for applying”), I checked the box for “Banking purpose….” and wrote in the space provided that I was opening a business checking account. 

Even though I had not yet received my Tax ID, I was able to open a checking account for Obstacle Illusions, LLC.  All the bank cared about was that the business was legally established within the state of Ohio. 

All they had to do was to pull up my records at the Secretary of State’s website, which you already saw here.  In addition to opening a separate checking account, I also got a business credit card, making it easier to keep track of business-related expenses.    

Bottom line?  If your business is a one-person operation with no employees (you can hire independent contractors to farm out work as long as it’s clear they are not employees), it’ll be much easier to form your business as an LLC.  You can do it yourself and save a bundle.  As you grow and expand, taking on employees, you can always convert your business from an LLC structure to that of a corporation.  By that point, you’ll be raking in so much money that you won’t care how much it costs to hire a lawyer!  

For additional information, see Eight Easy Things to Do Before You Form Your Company. 

Food for thought:  Are you going to send a message to the universe that you are serious about having your own business and take yourself to the next level?     

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