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5 Tips for Starting an LLC for a Handyman Business

Getting Down To Business

So you've decided to take your handyman skills from a hobby to a full-fledged business as an LLC? An LLC is a good choice if you're running a small business and wish to keep your personal risks and taxes low. 

Getting an LLC started is not that difficult at all, and many of the steps can be handled by a lawyer if you prefer. We're going to take you through the steps of establishing your LLC status. Even if you get a lawyer's help, use this guide to make important notes to take to that first meeting.

If you choose to do all the setup work yourself, make sure you research the LLC requirements for your state thoroughly. Requirements may vary from state to state. 

Step 1: Create your business name

The business name you choose is important. It could be as simple as "Joe's Handyman Service LLC" or as focused as "Precision Window Installation & Repair LLC." 

Your business name will always be followed by "LLC" or "Limited Liability Company."

Your business name needs to be unique and not already trademarked by someone else in your state. In addition, your business name should make it clear what services you are providing unless you're establishing a multi-purpose business. 

First, choose the state you'll register your LLC in. Then, do an internet search for the business name you'd like to register. 

LLCs are formed on a state-by-state basis. There cannot be two LLCs with the same name in the same state.

While you can use a name that's the same as another business in a different state, consider making your name more unique when possible. The more your business is personalized to you, the better. 

One tip to creating your own unique business name is to experiment with key terms your prospects would be looking for when they need your services. Play with names, acronyms, location-based wording, and more to help you find a name that makes you stand out as the person they need to call.

In most states, the Secretary of State website will have an article describing your state's LLC naming requirements. Sometimes it can be somewhere else. Make sure you find this and go through all the requirements before setting up your LLC.

Step 2: Who is the registered agent?

The registered agent for an LLC is the person who receives the official or legal documents on behalf of the LLC. 

Often, if you're forming an LLC that you run as a sole proprietorship, you will set yourself as the registered agent. You can also set an employee up as the registered agent as you grow your company and need more help.

The registered agent must be at least 18 years old. The agent has to be available at an address within your business's state during regular business hours. 

There are companies that provide registered agent services for a fee if you need to use an outside source. These may cost more than a hundred dollars per year. 

If you have a busy work schedule, hiring a registered agent is worth it. Make sure you choose someone you can trust to handle your affairs. When they get lazy in their duties or go against the law, they could ruin your business.

Step 3: Grab your state's LLC Article of Organization Form

This is the document filed with the state agency that handles business filings in your state. It may be called another name such as certificate of formation or document of organization.

You should be able to find it on the same website you found the requirements for your business name.

Step 4: Prepare the LLC Article of Organization Form

Make sure you gather all the following information for your form:

  • Your business name
  • The address of your principal place of business
  • The purpose of your business
  • The way your LLC will be managed
  • Contact information for the registered agent 
  • The duration of the LLC

You will need the business owners' signatures on the form. In some cases, you may need the registered agent's signature.

In addition, you may be required to publish a notice in the newspaper announcing your desire to register your LLC. If your state requires it, you'll have to have this completed and visible for a specified time before you can file your articles of organization.

You will find the requirements for your state at the same website you checked for your name.

Step 5: File the Articles of Organization

The first rule is to check your articles of organization carefully and then check them again before filing them. When you're ready, file them either yourself according to your state department's instructions or have a service do it for you. 

When your documents are approved, you'll receive a certificate. On that certificate will be the information you need to set up a business bank account and a tax ID number. 

Step 6: Apply for an Employer Identification Number

The Employer Identification Number (EIN) is generally needed for any business. It may also be referred to as the Federal Tax Identification Number. This number is unique to each organization and its identification with the IRS.

The IRS makes it easy and convenient to get an EIN. You can apply online, use fax, email, or even apply over the telephone. They've made it very easy to apply online and immediately get your EIN. 

You can find it on the IRS website. You will also find a good FAQ section that will help you determine if you should apply and how. 

As a handyman service business, it's suggested that you get your EIN and have it ready, even if you're not planning on hiring other people. It's free and one less thing you have to worry about if you do need it in the future. 

Even if you don't have employees, you may wish to procure funds for your business from a bank or another institution. Sometimes they require you to use the EIN on the paperwork, and getting it now will save you this hassle in the future.

Step 7: Create an Operating Agreement

An important step in establishing your LLC is the Operating Agreement. Your state may not require one, but you will likely find it necessary to have it for other business needs anyway.

This operating agreement may be part of your business plan also. If you haven't created your business plan yet, you can start here by getting this section out of the way. 

The operating agreement establishes the financial, legal, and management rights details of all people involved in the LLC. It will lay out how your profits are distributed, what happens when someone leaves the LLC, and who contributes capital to the business. 

It's important for businesses that have more than one member or partner to the LLC. It's helpful for solo business owners for bookkeeping, dealing with financial institutions, and drafting materials such as business plans.

A single-member LLC can be one of the many templates available online. Multiple-member LLCs will benefit from hiring an attorney to handle the creation of these documents. 

Step 8: Set up your business banking.

An LLC must have a bank account separate from your personal expenses. Limited liability is the business designation that protects your personal assets from risk if something goes wrong within your business. 

If your personal and business assets are tied together, your personal assets cannot be properly protected from risks, such as bankruptcy and lawsuits. Open a separate bank account for your business as soon as you start the business.

In addition, make sure you get a credit card or other credit for your business that is uniquely managed through your business and does not run through your personal accounts at all. 

Step 9: Create your LLC maintenance plan.

Create a schedule for maintaining the paperwork needed to keep your business in good standing with your state. Your state may require an annual report or biannual report, which will include a filing fee. 

In addition, look at other licenses and permits you need for the type of work you do. Add this to your initial schedule and to your maintenance schedule for any that require renewals. 

Consider your insurance needs for your business. A basic handyman business will likely need a handyman general liability policy. Go over the risks you face in operating your business with your insurance agent to determine if you need additional coverage.

A Google search at the time of writing this piece shows that typical handyman insurance runs $800-1000 per year. 

Wrapping it up:

Your handyman business has a lot of potential of producing an income you can count on, and forming an LLC is one of the best business models to establish. You'll help protect your home and family from any retribution of mistakes you may make with the business or from any unforeseen difficulties.

Establishing your LLC is not difficult, and it will help you build a strong business image that people will trust. Just take your time and make sure you go through all the laws in your state. Follow them, and you're all set for operation.