Definition

What Is An LLC?

LLC, which stands for Limited Liability Company, is a hybrid business structure that offers the advantages of sole proprietorships, partnerships, and corporations. Forming an LLC is simple, similar to setting up a sole proprietorship or partnership, but it still provides legal protections for its owners, much like corporations. LLCs give owners complete control of the business while keeping their personal assets safe from penalties caused by legal actions. This level of ease, control, and protection makes it a good option for new companies, including your plumbing business.

Advantages

What Are The Advantages of A Plumber LLC?

LLCs provide more than just legal protections as you start your plumbing business. Here’s a quick look at some of the benefits:

Disadvantages

What Are The Disadvantages of A Plumber LLC?

While LLCs have many benefits, they also have a few downsides you need to know about. For one, important decisions in your LLC require the approval of all members. This can potentially slow down the decision-making process, particularly if you have a large number of members. For example, if your plumbing LLC has members that are hard to reach or are always out on projects, operational changes won’t be approved as quickly. This is to appoint conflict down the road.

Remember, if one LLC member is unhappy with how things are run, they can choose to leave. Any changes in LLC management need lengthy progress.

We also mentioned how LLCs offer flexible taxation options, but unless you understand how it works, you won’t be able to maximize your tax savings. Fortunately, this is something that can be resolved by hiring a reliable accountant. While there might be a cost associated with their services, an accountant can help you navigate the complexities of tax regulations and ensure you retain a higher portion of your plumbing business’s profits.

LLC Formation

How To Create A Plumber LLC

Now let’s move on to creating your own plumber LLC. While states vary in some requirements, they all basically share the same process of forming a legitimate business. Here’s what you need to do.

1. Get certified as a plumber
2. Create a name for your company
3. Get a registered agent
4. A Certificate of Organization
5. Get an EIN
6. Create an Operating Agreement

Get certified as a plumber

If you have professional experience as a plumber, you should be certified already. If not, you’ll need to get certified before opening your company. 

First, get your GED and attend a trade school where you can get plumbing courses and relevant training. You won’t need a college degree for the job, but you’ll need to get certified by an accredited institution. This will take you about two years to finish. 

After that, get some experience by being an apprentice. This can take about four to five years, but the lessons you learn from hands-on experience are worth the time spent.

Lastly, pass the licensure exam to be a certified plumber. The tests you take depend on what your state requires, but they will always include reading and comprehension, basic math, and general plumbing practices. Only after this should you proceed to form that business.

Create a name for your company

Your LLC needs a unique name that isn’t used by other companies in your state. It has to be easy to remember, must clearly communicate your services to potential clients, and also embody your company’s branding.

Get a registered agent

A registered agent is someone who can act as an intermediary between your LLC and the state. They receive legal documents pertaining to your business and act as a representative of your company. They must reside in the state where your LLC is registered and should be affiliated with a reputable organization providing these services.

A Certificate of Organization

This is a document used to establish your LLC’s existence in your state. The Certificate of Organization, sometimes called the Article(s) of Organization, contains details about your plumber LLC, its members, how it does business and its purposes. Make sure to file this and have it approved so you can operate.

Get an EIN

The Employer Identification Number (EIN) is necessary for a variety of reasons. You need it when hiring plumbers and office personnel, filing taxes, and opening a bank account for your business. You will also need this if you plan to take out loans for the company’s needs.

Create an Operating Agreement

Lastly, draft an Operating Agreement for your plumber LLC. This document is used to define the relationship between everyone in your company and instruct everyone about their rules and responsibilities. It is also used to clarify how your LLC handles profits and losses. This will be very handy when you hire workers for various plumbing projects or when you expand your services to other places.

LLC Taxes

How Are Plumber LLCs Taxed?

The IRS considers an LLC as a “pass-through entity.” This means that any income it receives is “passed through” to its members (in this case, you) and avoids double taxation. If you are it’s only owner, you shoulder all the tax burden. But if your plumber LLC is co-owned, the responsibility is shared between its members.

If your state requires it, you will also have to pay an annual renewal fee called a Franchise Tax. The amount varies according to your area but can be between $100 and $800.

Costs

What Are The Costs Of Starting A Plumber LLC?

Your new plumber LLC needs finances before it can start operations. Here’s what you need to spend as you form your new LLC:

Filing Fees

This refers to the fees you need to pay when filing documents to register your LLC with your Secretary of State. It will cost you between $50 and $800, depending on your state. To avoid errors and late submissions when filing, we suggest hiring experts to do it for you.

Registered Agent Fees

You can be your own plumbing LLC’s registered agent, but entrusting these responsibilities to one can help you to free up your time to concentrate on your projects. Additionally, having a registered agent allows your LLC to conduct business in other states, expanding your opportunities beyond your first state of registration.

Operating Agreement

You can create an operating agreement for your LLC at no cost if you choose to do it yourself. But if you want to make sure that you’re not missing any details, hire a lawyer to help you out. Expect to spend up to $200 if you want their advice.

Publication

When starting your LLC, it may be required to publish notices in local newspapers for a certain period of time. The duration varies with state, however, so ask your local Secretary of State’s office for details. Publishing costs also differ depending on the newspaper, so ask a few to compare prices.

Starting your own plumber LLC will require some initial effort and financial investment, but the benefits you will reap once it is formed are well worth the cost. By forming an LLC, you gain the advantages of flexibility, legal protections, and potential growth. As an LLC, you also gain added credibility to attract clients with bigger contracts. So, what are you waiting for? Start your own plumbing LLC with us today.

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.