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	SAHOA
	598 West Main St Suite #7 Norwich, CT 06360 (860) 889-2893

 

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Renew Online

You may now renew your annual membership dues online. Annual dues are $45.00.

I made the decision to change my cleaning company from a (sole proprietor) to a Limited Liability Company (LLC) after nearly seven years in business. From a business planning standpoint, this decision may have been more timely at the start of my business, but I learned it is possible to make the change as my business grew and my legal needs changed. Here is how I made the decision to change, and the steps I took to form my new company.

“It’s only $60.00 to become an LLC.” That’s what I was hearing from friends and associates. I had a lingering feeling that I probably should have done this at the time I began my business, but I was a novice then and I figured that I had plenty of insurance to cover most of my risk. At the time of my decision to form an LLC, I was having my employee manual updated, so I took the opportunity then to ask my lawyer to explain the pros and cons of forming an LLC and what it would mean for my business.

The first thing I learned was that once the switch had been made from DBA to LLC, the DBA would no longer exist. I would be creating a brand new business. It took me a while to absorb this. I had imagined it was as simple as adding the LLC to the company’s name! I was all set to carry on business as usual. The key difference I now understand is that my liability is now limited to my company’s assets and not my personal assets. This is such an important factor to consider in your decision to become an LLC. So, my lawyer filed the necessary forms with the state, sent in the $60.00 registration fee and, again, I believed I was all set.

Did I say all set? Well there’s a valuable lesson to be learned here. It was more of a pain in the wallet than I thought. I should note that while the filing fees did total $60, my lawyer’s fees totaled an additional $400, so that was one more expense to absorb. Also, when I went to the bank to open a new LLC account about a week after filing, I discovered another glitch. With the Patriot Act in effect, I had to wait for confirmation from the state, give a copy of the articles of incorporation to the bank, and then proceed with business. Though I was eager to get things rolling, I was forced to wait another two weeks before the papers came in the mail. I had no checks, which limited my ability to conduct business. To add insult to injury, I had to dispose of $60 worth of business checking supplies from my old DBA.

My next stop was the CT Dept. of Revenue Services in Norwich, where the most pleasant man at the counter informed me that I should call the IRS and get a new FID#. I was able to use the phone there and register free of charge. Next, I learned I now needed to register my new business and get a new CT sales tax ID# at a cost of $20. With several filing deadlines fast approaching, I began to worry about potential snags with all these changes. I did get all the new coupon books and so far, with the help of a good bookkeeper and accountant, I’ve had no complications with federal withholding taxes.

I did receive the 4th quarter sales tax report for my DBA, and soon learned I’m not yet in the system as an LLC. While I’ve already received my new tax ID from the state, I had to fax a copy of my ID number on my letterhead to Hartford. Shortly thereafter, I received a Sales and Use tax report for the LLC. I still must file the DBA sales tax report for that quarter as the final report for the DBA.

Next - back to the bank to order new checks and deposit slips at a cost of $78. To my surprise (because I am still naive ) I will now be charged for my LLC checking account. (My DBA account was free.) Charges vary, so it’s important to research this cost thoroughly to find a low-cost business account.

Another cost to consider is advertising. I needed to add LLC to my logo. I had new business cards printed about three months before and they are quite expensive ($160) so I will not be changing these yet. Additional costs were for new envelopes ($90), new magnetic vehicle signs ($90), calendars for the new year ($129), and a sign for office door($30).

The final surprise assault on my wallet is the $250 annual tax on LLC’s by the State of Connecticut.

This was certainly a learning experience for me. I think the moral of the story is decide to be an LLC at the very start of your business in order to avoid all these costly changes later on.