CHAT WITH US
How To Set Up An LLC In New Hampshire
Starting or expanding a business in New Hampshire means wading through paperwork, state regulations, and fees. It can be overwhelming and confusing for entrepreneurs who are new to the game. But there is a solution: setting up an LLC in New Hampshire!
With the right guidance and information, entrepreneurs can make setting up an LLC a breeze. This 2023 Guide provides the essential knowledge you need to get started in New Hampshire. Discover how to clarify the confusion, save time and money, and ensure your LLC is set up for success.
Definition
What is an LLC?
An LLC, or a Limited Liability Company, is an entity created by state statute which protects its owners from personal liabilities associated with the business. An LLC can operate like a corporation while also enjoying certain pass-through taxation benefits of a sole proprietorship. Types of LLCs range from single-member LLCs whose ownership structure is limited to one individual to multi-member LLCs with more than one owner and whose operations are significantly more complex.
Additionally, Professional service LLCs specialize in a particular profession (lawyers, accountants, and architects) as well as agricultural and non-profit subsidiaries for related businesses or those set up with charitable objectives. A major benefit of creating an LLC is the reduced paperwork compared to forming and managing other entities like corporations. Many investors consider setting up an LLC because it offers stability and protection.
Advantages
Advantages Of an LLC In New Hampshire
Starting a business is no easy task. There are many things to consider, from what type of business structure to choose to decide how you will fund it. One of the most popular business structures is the Limited Liability Company (LLC). This company offers many advantages, which are:
Limited personal liability
The primary benefit of forming an LLC is that it provides limited liability protection for its members. An LLC limits its members’ personal liability in case the company runs into legal or financial difficulties. If someone sues your LLC for damages or claims, you will not be held personally liable for those debts; instead, only your LLC’s assets are at risk. This makes it much less likely that you will face financial ruin due to lawsuits or debts from your business.
Management structure
An LLC also has a flexible management structure that allows owners to choose how they want their company to be managed. For example, owners can opt to have their company managed by a board of directors or by one manager who controls its daily operations and decisions. This flexibility allows owners to tailor the management style of their LLC according to their own preferences and needs.
Pass-through taxation
Another advantage of forming an LLC is pass-through taxation. This means that all profits and losses generated by the business pass through directly to its owners without being taxed, similar to traditional corporations. The profits are reported on the owner’s personal tax returns and only taxed once at individual income tax rates instead of being subject to double taxation like corporations are.
Heightened credibility
Lastly, forming an LLC gives your business a heightened sense of credibility because it is seen as more legitimate than other forms of businesses entities, such as sole proprietorships or general partnerships, which do not provide limited liability protection for their owners nor do they offer any other advantages such as pass-through taxation or flexible membership structures like an LLC does. This increased sense of legitimacy may help attract potential investors and customers who may be hesitant about dealing with businesses with more traditional ownership structures.
Disadvantages
The Disadvantages Of An LLC
An LLC offers the flexibility of personal liability protection while allowing business owners to be taxed as individuals. But with great power comes great responsibility—or in this case, drawbacks. Some disadvantages of forming an LLC are:
Costly formation process
Forming an LLC can be costly in terms of both time and money. Depending on your state, you may need to pay filing fees or register your business with the state. Additionally, some states require you to have a lawyer draw up the Articles of Organization, which can add even more costs to the formation process.
Limited investment opportunities
An LLC limits investment opportunities since it requires all profits and losses to pass through to its owners, who then report them on their individual taxes. This means that investors cannot purchase stock in an LLC as they would with a corporation, so many potential investors will pass on investing in an LLC due to the lack of potential return on their investment.
Complex taxation process
LLCs are subject to double taxation—once at the entity level and again when profits are distributed to its owners during tax season—which can make tax filing more complex than other types of businesses. Additionally, not all states allow for single-member LLCs (meaning those owned by one person), which can further complicate matters when it comes time to file taxes each year.
LLC Formation
LLC Formation In New Hampshire
Forming an LLC in New Hampshire is relatively straightforward, but there are certain steps you must take to ensure that your business is compliant with state laws. Here is a step-by-step guide to forming an LLC in New Hampshire:
- Choose a unique name for your business
- Choose a registered agent in New Hampshire
- File a Certificate of Formation
- Create an Operating Agreement
- Apply for an EIN
Choose a unique name for your business
Choosing your LLC name is very crucial in the formation process. The name shows your business identity, so make sure it is unique. Here are some naming guidelines to consider when selecting your LLC name:
- Keep it free of words that could be confused with government agencies (such as the FBI and State Department).
- Do not use words like Bank, Attorney, university, etc.
- Include “limited liability company” or an abbreviation (LLC, L.L.C.) in your LLC name.
- Choose a name that isn’t already in use.
Now that you have decided on the name for your LLC, you can check its availability with the New Hampshire Secretary of State Corporation Division business name database. This will let you know if your chosen name already exists. You may also reserve an available name for up to 120 days by filing a name reservation application with the Secretary of State for $15.
Note:
If you want to do business under a name other than your LLC’s legal title, you can easily do that. Register for a trade, fictitious, or assumed name in New Hampshire by filing the necessary Application (Form TN-1) with the Secretary of State. The process is simple and efficient; it takes just minutes online or through postal mail submission and costs only $50! Keep things professional as your company grows.
Choose a registered agent in New Hampshire
It is essential to appoint a registered agent to set up an LLC in New Hampshire. This individual or agency acts as your business’s official representative, ensuring that all documents filed with the state are delivered promptly. Furthermore, they can alert you when important changes happen with the LLC, such as new taxes, fees, or legal regulations.
When selecting a registered agent for your LLC, it’s important to choose someone responsible and able to act quickly if needed. They should also be located within New Hampshire so that legal papers addressed to your organization can be received promptly. Lastly, check the background of any potential agents before settling on the ideal candidate for the job. Finding an experienced professional may help you avoid costly mistakes down the road.
File a Certificate of Formation
Filing a Certificate of Formation is important to starting a New Hampshire LLC. It is the first document to be prepared and filed with the New Hampshire Secretary of State before business operations can commence. The required article of organization includes information like the name of the LLC, its purpose, and its address (if applicable). Additionally, the article will outline whether members or managers manage the LLC.
The cost of filing this certificate is $100; however, it increases to $102 when submitted online. It typically takes 2-3 weeks for processing and approval by New Hampshire’s Secretary of State. This filing ensures that all necessary information has been provided so that the LLC exists as a legal entity and is recognized among state and federal regulations governing businesses.
Create an Operating Agreement
When starting a New Hampshire LLC, it is important to create an operating agreement to lay out the expectations and duties of all members. This allows everyone involved with the business to share the same vision regarding operations and decision-making, creating a strong foundation for successful and effective collaboration.
The document should include each member’s ownership interest and roles, profit allocations and percentage distributions, required voting procedures, tax responsibilities, dissolution agreements, and dispute resolution processes.
Regular reviews of the New Hampshire operating agreement will ensure that everyone is up-to-date on changes within the LLC structure and any applicable laws that may have altered since the initial drafting of the agreement. Developing this document will provide your New Hampshire LLC with a strong framework of organization and delegation.
Apply for an EIN
Obtaining an Employer Identification Number (EIN) is an important step for any New Hampshire Limited Liability Company (LLC). An EIN allows the LLC to establish a business bank account, hire employees if necessary, and, most importantly, establish credit. Establishing financial credibility demonstrates to creditors and banks that you are serious about your business venture and can back up your financial responsibilities in the future.
Additionally, an EIN is needed to establish permits or licenses from local governments should that be required for operations. Obtaining an EIN is simple and can be completed online in just a few steps. Therefore, it is of utmost importance for entrepreneurs starting an LLC in New Hampshire to complete this process at the onset of their new venture.
Types of LLC
Which type of LLC is ideal for me?
In New Hampshire, there are a few types of LLCs that you can choose from, depending on your specific needs and business structure. Here are the main types:
- Single-Member LLC: This type of LLC is perfect for individuals who are the sole owner of their business. It provides limited liability protection for the owner, keeping their personal assets separate from the business. It is the simplest form of an LLC and can be a good choice for small businesses or sole proprietorships.
- Multi-Member LLC: This is a more common type of LLC, where two or more people join together to form a business. Like the single-member LLC, it provides limited liability protection for all the members involved. This type of LLC is suitable for businesses with multiple owners who want to share the responsibilities and profits of the company.
- Manager-Managed LLC: This type of LLC is similar to a multi-member LLC but with a slight difference in management structure. Instead of all members being involved in the day-to-day operations of the business, a designated manager (or managers) is appointed to oversee the operations. This manager can be one of the members or an external individual or entity. This structure can be beneficial for businesses that want a more hierarchical management system.
- Professional LLC (PLLC): A PLLC is a specific type of LLC designated for licensed professionals, such as doctors, lawyers, or architects. This type of LLC provides limited liability protection for its members while allowing them to offer professional services. Note that the requirements for forming a PLLC may vary, and you should consult with a professional or an attorney to ensure you meet the necessary criteria.
LLC Taxes
Applicable LLC Taxes In New Hampshire
Here in New Hampshire, there are some specific taxes every LLC should be aware of. Below are some taxes that may apply to your LLC:
Annual Report
Staying compliant with the State of New Hampshire can be daunting, but filing your annual report is essential to protecting and running your LLC. You have two easy options for completing this requirement – you may mail in or complete it online at the Secretary of State website (just remember you’ll need that state-issued Business ID number). Don’t forget all reports must be submitted by April 1st each year, along with a $100 fee.
State Business Tax
New Hampshire has an array of taxes applicable to LLCs, depending on the size and value of their incomes. The Business Profits Tax applies to businesses with gross income over $50K. In comparison, the Business Enterprise Tax is relevant for companies making more than $200K in receipts or valued at over 100 Thousand dollars. Both can be filed online using DORA’s file system – a secure platform designed specifically for tax returns to make filing as effortless as possible.
Sales And Use Tax
With no sales tax, New Hampshire is a fiscal paradise for LLCs that sell goods. By forming an LLC in the Granite State and keeping your business local, you can take confidence knowing there’s one less administrative aspect to worry about – with zero taxes imposed on your transactions.
Self-Employment Tax
As an LLC member or manager, you need to be aware of the Federal Self-Employment Tax in New Hampshire. This tax rate is 15.3%, which means employers and employees must withhold 7.65% of their taxable wages from each paycheck earned throughout the year. While this might seem daunting at first, your expenses can be deducted once it comes time to calculate exactly how much self-employment tax your business owes.
Costs
Costs Of Forming LLC In New Hampshire
If you’re considering starting a Limited Liability Company (LLC) in New Hampshire, you may wonder how much it’ll cost. The good news is that forming an LLC in New Hampshire is relatively inexpensive and straightforward.
The first step in forming your LLC is filing a Certificate of Formation online with the New Hampshire Department of State. This will cost you $100 and must be done before you start your business. Once your business is operational, you’ll need to pay an annual report fee of $100. This fee must be paid by the 15th day of the third month following the close of the tax year, and failure to file on time incurs a penalty of $50.
If you want to create a name for your company other than its legal LLC business name, you’ll need to file an Application for Registration of Trade Name (Form TN-1) and pay a $50 filing fee. Additionally, if you want to reserve your name for up to 120 days before LLC formation, filing an LLC Name Reservation (Form 1) and paying the $15 filing fee is also required.
Some other costs associated with starting an LLC in New Hampshire are worth noting. For example, if you wish to obtain a Certificate of Good Standing from the Secretary of State once your company is established, there will be a fee. Additionally, if your company has gross receipts over $92,000 annually, they will be subject to a flat 7.6% tax rate due on the 15th day of the third month following the close of the tax year.
LLC Costs
Filing Articles of Organization
$100
Registered Agent Service (optional)
$50+
New Hampshire Annual Report
$100
Operating Agreement (optional)
$200+
Employer Identification Number (EIN)
Free
Business licenses and permits
Varies
Starting A Business
Business Opportunities to Explore in New Hampshire
Starting an LLC in NH offers a lot of potential for success due to its diverse economy, low taxes, and booming real estate market. Just make sure you read all the expenses associated with starting your LLC and plan accordingly. With the right combination of preparation, knowledge, and hard work, setting up an LLC in New Hampshire could be the beginning of a successful and profitable business venture.
Real Estate
The real estate market in New Hampshire is booming. With its growing population and thriving economy, investors have plenty of opportunities to make money by buying and selling properties. The median home value in NH is around $275,000 – significantly higher than the national average of $200,000. Those who invest in real estate here can expect to see good investment returns over time.
Tourism Department
New Hampshire boasts an active tourism industry with many attractions for visitors from all over the world. From its natural beauty to its vibrant culture and history, NH has something for everyone who visits. For businesses looking to capitalize on this opportunity, setting up shops near popular tourist destinations can be a great way to gain exposure and revenue from tourists coming into the area. Additionally, businesses can partner with local restaurants or hotels to offer packages or discounts to draw more visitors into your part of town.
Sports Manufacturing
Sports manufacturing is another promising business opportunity in New Hampshire due to its wide range of sporting goods manufacturers throughout the state. Companies like Nike and Adidas have factories here that produce top-of-the-line apparel, shoes, and accessories for sports teams and athletes across the country, making them ideal partners for anyone looking to invest money into this industry.
Comparisons
Is LLC The Best Entity For Me?
Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.
LLC vs Corporation (C-Corp)
Sole proprietorships and Limited Liability Companies (LLCs) are two of the most common business entities for individuals and small businesses. Learn what differentiates the two today.
LLC vs S-Corp
Not sure what business structure to choose? Learn about the key differences between LLC and S-Corp today.