single-member LLC: Quick Guide to Forming and Running Your Own Company

If you’re a solo founder, a single‑member LLC (Limited Liability Company) lets you get the protection of a corporation without the hassle of a big partnership. In plain terms, it’s a one‑person business that shields your personal assets from business debt while keeping taxes simple.

Why Choose a Single‑Member LLC?

First off, the liability shield. Creditors can chase the business, but not your house, car or savings—unless you personally guarantee a loan. Second, tax filing is easy. The IRS treats a single‑member LLC as a “disregarded entity,” so you report profit and loss on Schedule C of your personal return. No double taxation like a C‑corp.

Flexibility is another win. You can decide how to run the company, set your own operating agreement, and change the structure later if you bring on partners. Plus, most states charge lower annual fees than a corporation, which means less paperwork and lower ongoing costs.

Step‑by‑Step: How to Set Up Your Single‑Member LLC

1. Pick a name. It must be unique in your state and include “LLC” or “Limited Liability Company.” Run a quick search on your state’s business portal to avoid clashes.

2. Choose a registered agent. This is the person or service that receives legal documents for your LLC. Many providers offer this for a modest yearly fee.

3. File Articles of Organization. Submit the form (often online) with your state’s Secretary of State office. You’ll provide the LLC name, address, and agent info. The filing fee ranges from $50 to $150 in most states.

4. Get an EIN. Even though you’re the only member, an Employer Identification Number from the IRS lets you open a business bank account and hire employees later. It’s free – just apply on the IRS website.

5. Write an operating agreement. This internal document outlines how you’ll run the LLC, even if you’re the sole owner. It helps prove the separation between you and the business if a court ever questions it.

6. Open a business bank account. Keep personal and business money apart. It simplifies bookkeeping and protects your liability shield.

7. Stay compliant. Most states require an annual report or franchise tax. Set a reminder so you don’t miss deadlines and incur penalties.

That’s the core of it. After you file, you can start invoicing, hiring, or taking on contracts just like any other company.

One common mistake is mixing personal and business expenses. Even with a single‑member LLC, the protection only works if you treat the business as a separate entity. Use a dedicated credit card, keep receipts, and run quarterly bookkeeping.

Another pitfall is ignoring state tax obligations. Some states levy a minimum LLC tax regardless of profit. Check your local rules early so you aren’t surprised at year‑end.

Lastly, think ahead. If you anticipate bringing on co‑founders or investors, you might want to set up a multi‑member LLC or corporation from the start. Converting later is possible, but it adds paperwork and may trigger tax events.

Bottom line: a single‑member LLC is a low‑cost, low‑complexity way to protect yourself while you test a business idea. Follow the steps above, keep your finances clean, and you’ll have a solid legal foundation to grow from."