What is an LLC and how to start one?
This article will outline the ways in which an LLC can help pave the way to long-lasting B2C (business to consumer) success. It will also show some additional strategies for growing your business.
Small businesses make up 99.9% of all U.S. businesses. Thanks to technology, they’re becoming more possible and popular. When you start a new business, you naturally hope for its long-term success. Business longevity doesn’t happen by accident, but rather it happens through intentionality and strategy. There are a number of proactive steps you can take to position your B2C company for sustained, scalable growth.
One step is to choose the right legal structure for your company. And while there’s not necessarily a one-size-fits-all solution, many businesses may benefit from the LLC format. Let’s take a look at why.
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What is an LLC?
For starters, how do we define an LLC? An LLC, or Limited Liability Company, is one of the most popular legal structures for small businesses in the United States.
In several significant ways, it differs from the sole proprietorship. A sole proprietorship is the default legal structure for those generating revenue on the basis of self-employment.
What’s the most significant difference? Well, when you create an LLC, you’re actually establishing a whole new legal entity. With an LLC you can actually maintain a clean line of separation between business assets and liabilities and personal assets and liabilities. This comes with a number of essential benefits we’ll touch on in a moment.
This is not so with sole proprietorship. Alternatively, with sole proprietorship, the law does not recognize any distinction between the business and its owner.
How do LLCs help sustain B2C growth?
LLCs are popular, and for good reasons. As of 2018, 35% of businesses were LLCs. This is likely because LLCs offer some distinct advantages for B2C companies looking to grow. It’s important to note that the specific benefits can vary. It’s often based on the nature of the business and its individual circumstances. Here are some common advantages:
Let’s take a closer look at these.
Personal liability protection
When managed properly, an LLC business structure keeps your personal assets/liabilities distinct from your business assets/liabilities. An LLC business is its own distinct entity. In essence, this allows you to invest in your business without having to worry as much about the negative impact on your family or to your personal bank account(s). It allows for more peace of mind.
In the case of a lawsuit against your company, your personal assets would remain safe. In the case of financial issues, you can safeguard your personal wealth from creditors as well as litigation.
Flexible tax options
When you first launch an LLC, the default position is to be taxed on a pass-through basis. This means you declare profits on your personal tax return and pay your usual tax rate. This is often great for fledgling businesses. But if your business does take off, you can always opt into corporate tax status. In some cases, doing so will make more financial sense.
Speaking of LLCs and taxes, did you know that LLCs are responsible for 70.4% of all partnership tax returns?
LLCs also provide plenty of wiggle room to manage the day-to-day operations of your company as you see fit. For example, you have the leeway to fly solo, to enlist a team of partners, or even to bring in a third-party management team. When it comes to growth and scalability, having this level of flexibility is invaluable.
How to create an LLC
As for the specific steps required for registering an LLC, there’s a lot of state-by-state variation. With that said, the process usually looks something like this:
- First, you need to choose a name for your LLC. It’s critical that this is something distinct from any other LLC in your state. Most states will provide an online directory, allowing you to determine whether the name you want is available.
- Name someone to serve as your Registered Agent. This can be an individual or an organization, but whoever it is needs to have a postal address in your state. The Registered Agent receives legal documents on your LLC’s behalf.
- Get and file your Articles of Organization with the state and pay the required fee. How long does LLC approval take? Again, it can vary, but usually it’s possible to get an LLC off the ground within mere days.
- (Optional depending on state) write an Operating Agreement, clarifying how your B2C business will be run. An operating agreement is especially helpful if you have more than one owner or partner. It can help ensure all those involved agree on their rights and responsibilities.
- You’ll also want to apply for an employer identification number and set up a business bank account. That would be the case with any business, though.
Other strategies for B2C growth
Establishing an LLC can be an important first step toward scalable B2C growth. Here are a few additional measures for leveraging your LLC.
Invest in automation
Sooner or later, your B2C business will start bringing in so many customers that you need a little help to keep up. Hiring personnel may be necessary, but it can also eat into your overhead. You may be able to offset these overhead costs by investing in automation technology, which can be used to minimize the number of tedious or repetitive tasks you have to complete manually. Consider AI chatbots to handle customer service, or social media platforms that can automatically post for you.
Develop a digital marketing plan
Scalable growth requires more than just haphazard marketing efforts. You’ll need a full-fledged, comprehensive strategy, one that unites SEO, website development, paid ads, and email marketing. As a starting point, make sure you have a clear sense of your B2C’s value proposition. You’ll need this along with a well-defined target audience that you’re trying to reach.
Consider customer loyalty programs
Bringing in new customers is important, but scalability also means retaining existing customers whenever possible. One way to do this is to use a customer loyalty program, providing discounts or perks to your most loyal clientele.
Lean on influencers
As you think about marketing your B2C products, consider leveraging the reach and clout of online influencers. Send product samples to influencers and micro-influencers in your niche, inviting them to try your wares and feature them. This can be a cost-effective way to spread the word about your brand.
Position your B2C company for long-term growth
When you launch a new B2C company, you can’t help but dream of long-term growth. One way to make that dream a reality is to establish your company as an LLC, then to deploy top-tier strategies to develop your brand’s reach and reputation. These strategies can get you started down the road to lasting B2C success.