One of the great things about the printing business is how scalable it is. It’s easy to start your business on a modest scale and expand it over time, adapting your business to accommodate a growing clientele.
Of course, scaling your business requires some strategic considerations. You don’t want to build up too much too fast, risking a collapse of your resources or a compromise of your vision.
So what steps can you take to ensure a smart expansion? One important factor is choosing the right legal structure for your business. Specifically, structuring your company as a limited liability company (LLC) can be invaluable to your scaling efforts.
What is an LLC?
You’ve probably heard of the LLC structure before, but have you ever explored what these three letters actually entail?
Basically, the LLC is a legal structure that establishes your business as a legal entity unto itself. In other words, the LLC creates a clear line of separation between the business and the business owner.
What this means is that you can keep your personal assets separate from your business assets. And, you can keep your business liabilities confined to the business, without taking them on personally.
The LLC format is the most popular legal structure for small businesses in America, and it makes for a great option for printing companies that have scalability in mind.
How Do You Establish an LLC?
If you do wish to establish your printing company as an LLC, there are a few steps you’ll need to follow. These include:
- Drafting an Operating Agreement, which denotes the ways in which you’ll allocate profits and managerial duties between you and your partners.
- Filing your Operating Agreement with the state, and paying any required filing fees. (LLC fees vary by state, but usually fall somewhere between $15 and $200.)
- Requesting an employee identification number (EIN) from the IRS, if you don’t have one already. This is free for U.S. citizens.
- Opening a business bank account, allowing you to keep your business and personal assets separate.
The process of establishing an LLC is usually pretty easy. And while LLC approval times can vary from one state to the next, the entire process can often be completed in as little as a single afternoon.
How Can an LLC Help Your Printing Company Expand?
LLCs offer business owners a number of benefits. In particular, the LLC structure provides a number of built-in advantages to printing companies as they seek expansion. Consider just a few of them.
Personal Liability Protection
One of the most significant advantages of the LLC is personal liability protection.
By keeping your business assets and liabilities separate from your personal assets and liabilities, the LLC structure shields your legal risk. Lawsuits and creditors cannot come for your personal assets, and you won’t have to sell your house or deplete your child’s college fund if the business goes under.
This level of risk mitigation can provide protection and peace of mind for printing entrepreneurs as they take on new funding, or as they look for other ways to expand their business footprint.
Another reason why LLCs are popular among small business owners is that they provide flexible tax options.
The default option is that your company is taxed on a pass-through basis. This means you get to declare profits on your personal tax returns, and pay your normal income tax rate.
If you so desire, however, your multi-member LLC can opt for corporate taxation, paying the standard corporate tax rate.
Having multiple options available helps with tax planning, a critical part of scaling any business.
It’s important for your business to be seen as a credible business; not a side hustle or a hobby, but a legitimate operation. Credibility matters as you look to attract new customers, secure deals, or build trust with your partners.
Forming an LLC provides your printing business with greater credibility. It enhances your legitimacy and makes it easier for potential clients, partners, or investors to trust you.
If nothing else, you’ll be able to have a business bank account and accept payments directly to the company, not just to your individual account. This isn’t possible with a Sole Proprietorship, and it’s an important way to shore up your professional image.
In most states, establishing an LLC requires you to use the services of a Registered Agent. This is typically a third-party who receives important tax and legal documents on your behalf.
Using a Registered Agent can actually be a tremendous asset as you seek to scale your printing business. That’s because your Agent can handle a lot of administrative upkeep on your behalf. This frees you to spend more time making creative and strategic decisions to facilitate business growth.
LLCs can also be beneficial because they provide you with some flexibility about how you manage your company.
Consider the more rigid requirements of the Corporation. This legal structure will require you to have a Board of Directors in place, and to comply with numerous other rules about how your company is run.
By contrast, the LLC allows you with some wiggle room. When you draft your initial operating documents, you can choose whether to run the business solo or bring in partners. You can allocate managerial duties as you see fit, and write in clauses for adding or removing partners as needed.
The bottom line? LLCs make it easy to choose how you want to run your printing business, and to make any needed adjustments on the fly.
Access to Funding
As you consider options to scale your printing business, you may eventually decide you need to bring on investors or procure funding.
The LLC makes it easier to do so, compared with structures such as Partnerships or Sole Proprietorships. This goes back to our earlier point about credibility.
Simply put, people feel more comfortable loaning money or investing in a stable, formalized LLC. There is less perceived risk than with a fully independent Sole Proprietorship.
Indeed, the LLC structure will open up a range of funding options to you, including bank loans and lines of credit. And while you cannot sell shares in your company, you can still work to attract venture capitalists, should you so choose.
Customizable Operating Agreements
The word flexibility keeps coming up, and indeed, that’s one of the main reasons to use the LLC structure if you’re looking to scale your business. Simply put, there’s a lot of built-in space to adapt, evolve, and pivot as needed.
This is true even with the operating agreements you use to govern your LLC. You can include whatever provisions you like for resolving disputes between members, sharing profits, voting on changes to your LLC structure, and more.
In other words, as the needs of your printing business change, your LLC can grow and change accordingly.
As you consider growing your LLC, you’ll naturally start thinking long-term. Sooner or later, your printing business will face a need for succession planning. And the LLC format makes that pretty easy.
In fact, succession planning is built into the LLC structure. LLCs have provisions to transfer the ownership of the company through gift or inheritance, leading to a smooth transition and minimal tax burdens.
These succession planning features provide LLCs with a leg up on Sole Proprietorships or Partnerships, where it’s much more complicated for the business to continue after you pass away or retire.
Finally, it’s worth noting that LLC provides measures to protect your personal privacy. While filing and reporting requirements can vary from one state to the next, most states have very minimal standards for the types of business information you have to make public.
What this means is that, if you would like to keep the details of your growing company close to the vest, the LLC format is probably your best option.
LLCs are Ideally Suited for Growing Your Printing Business
Printing businesses have plenty of room to grow and expand, capturing new niches or mediums. As your customer base grows, it’s important to ensure a business infrastructure that can accommodate smart, strategic expansion.
To that end, one of the best things you can do is select the LLC structure. Registering as an LLC opens up countless benefits that can aid in business growth. These include flexibility with regard to how you’re taxed and how your company is managed day to day.
Additionally, LLCs offer personal liability protections, allowing you to keep your assets safe and secure. Other benefits include enhanced confidentiality, increased professional credibility, and much more.
What’s more, starting an LLC is usually fairly fast and easy, requiring little more than filing some documents with your state and paying a nominal fee. To move forward registering your LLC, talk with your business attorney or coach. Or, simply look into the LLC registration process that’s set up in the state where you do business.
Amanda E. Clark is a contributing writer to LLC University. She is a graduate of Eastern Michigan University and holds degrees in Journalism, Political Science, and English. She became a professional writer in 2008 and has led marketing and advertising initiatives for several Fortune 500 companies. She has appeared as a subject matter expert on panels about content and social media marketing. She regularly leads seminars and training sessions on trends and tactics in professional writing.