Whether you’ve started your business yet or not, you’ve probably thought to yourself, “Should my small pet business be an LLC?” or “Can I just operate using my name and social security number?”
The short answer is yes, and also yes.
The IRS does not require an individual person who is the only owner of a business to do anything other than report the income annually on a Schedule C. Even if you file documents to register an LLC name, you don’t NEED to get a separate Employment Identification Number (EIN) for your LLC.
However, if you ask most CPAs or attorneys, they will most likely recommend you do both: create an LLC and get an EIN for that LLC.
As someone who ran an accounting company for 10 years and set up dozens, if not hundreds, of small businesses, I also recommend forming an LLC.
Should My Small Pet Business Be An LLC?
My mother always said, “Shoulda, coulda, woulda.” I never got that as a kid, but now it makes sense. And in this case, you should because you can and because you will wish you had at some point, if you don’t. Shoulda, coulda, woulda.
As small pet business owners it can feel both overwhelming and confusing to step into the world of owning a corporation, but it does have to be that way. You can do it in 2 or 3 forms, and a once a year filing if your state requires it.
It also does not need to change how you file your taxes or do your bookkeeping. As long as you are the only owner, you can still file a Schedule C because you are a single member LLC. But, by creating an LLC for your business you separate your personal liabilities from that of your business.
Plus, it allows you to open up a separate bank account in your business name for your business’s finances. A separate bank account provides for a clear separation between you and your business. In other words, you will not personally be liable for your business’s debts.
What is an LLC and How Do I Become One?
LLC stands for Limited Liability Corporation. It is a corporation, but in its most simple form. You get the same limited liability a larger corporation gets, but in a form that is easier to run and manage.
To form an LLC you first register with your Secretary of State. Before you try to file your form, check to see if the name you plan to use is available. Every state has a business entity search where you can check to make sure the name you want to register is available.
Once you confirm the name is available, you can register your business by filing Articles of Organization right on the Secretary of State’s website for your state..
Pro Tip: If your state’s website does not make it clear where to click to search for a business name or file a form, search “business registration” and you should get the result you need.
How Much Does it Cost to Form an LLC?
The cost to file Articles of Organization to form an LLC for your pet business varies state to state.
In Colorado it’s $50 to file initially, and then each year you file an annual report that costs $10, as long as you file it on time. Not all states require annual reports though.
Forming an LLC is better in some states than forming one in others. Some make it easy with one form and one fee and others, like Florida, there is the form with the $100 fee plus another $25 to designate a Registered Agent. Don’t be scared off by that title. You can be your Registered Agent. A Registered Agent is the person authorized to file documents on the company’s behalf.
If you are creating an LLC in California you will most likely owe a minimum $800 fee to the California Franchise Tax Board. That is a fee that can definitely be cost prohibitive, so be sure to read through your state’s information about registering an LLC to ensure you know the forms and fees that may be due. Most states are not like California. Sorry Californians.
Initial costs to form an LLC can feel prohibitive, but I recommend figuring this into your start-up costs. There are always costs to start a business, even if the main cost is your time.
Pro Tip: Once you register your LLC, put a calendar reminder for the next year to file your annual report, if your state requires annual reports. Not all states require annual reports, but many do.
How Do I Get an EIN for My LLC?
Now that you have your LLC registered with your state you are ready to get your EIN. Head on over to irs.gov and search for form SS-4 online, Application For Employment Identification Number.
You will want to have your basic business information handy and be ready to complete the form in one sitting. You cannot save the form and go back to it, and the system will timeout after 15 minutes.
Completing the form should only take 5-15 minutes, depending on whether you need to refer to the form SS-4 instructions to help complete any section.
You can also click here for the pdf form that you would need to print and mail, but keep in mind that it could be weeks before you get back your acceptance letter with your EIN.
There is no fee to file a form SS-4 with the IRS.
What Do I Do With All These Business Forms?
Now that you have registered your pet business as an LLC with your state, and filed the SS-4 with the IRS, you have some legal forms to keep.
If you’ve done it all electronically, just create a folder on your computer and label it Business Formation Forms and put the official copies into that folder. Be sure to backup those docs, or if you like printed stuff, print them. Make a file to keep them in.
If you want to open a bank account in your business name you will need these forms, and we recommend you do that.
Is your pet business an LLC? Are you considering forming an LLC for your pet business?
Chloe DiVita is an original BlogPaws Executive Team member and is Co-founder of All Pet Voices, BlogPaws’ sister company. She’s been in the pet industry since 2009 and loves leading the All Pet Collaborative, a membership group for small pet businesses, with All Pet Voices Co-founder Jessica Shipman. She also LOVES speaking and if you put her in front of a camera she’ll talk until you tell her to stop. It comes in handy as Executive Producer for TEDxCambridge where she leading the speaker coaching team and is constantly in awe of the ideas being brought to the stage.