Starting your own pharmacy business can provide you with some incredible opportunities to make people’s lives better and generate some revenue. Even so, there are risks inherent to any business. One of the best ways to mitigate risk is to choose the right legal structure for your company.
There are a few legal structures to select from, but for most pharmacy businesses, the best bet is the Limited Liability Company (LLC). As you prepare to get your pharmacy business off the ground, it’s helpful to know a little bit more about how to register an LLC and about how long the process typically takes.
What is an LLC?
To begin with, what is an LLC, and how does it differ from other business structures?
When you start doing self-employed activities that generate an income, the government automatically classifies you as a sole proprietor. When you are a sole proprietor, there is no legal distinction between you and your business. In other words, you effectively are your business and cannot create any kind of demarcation between personal assets and liabilities and business assets and liabilities.
When you register as an LLC, however, you actually create a new legal entity. The LLC allows you to keep your pharmacy business assets and liabilities separate from your personal ones, which provides you with some important protections against lawsuits and creditors.
Why register your pharmacy business as an LLC?
Beyond these personal liability protections, there are several benefits to the LLC structure. Some of these benefits include:
- Ample flexibility with regard to how you distribute managerial duties.
- Flexibility with how you share profits among partners.
- There are different options for how you report to the IRS.
- Minimal administrative burdens, especially compared with corporations.
- Increased legitimacy and professionalism for your business.
How long does it take to register an LLC?
One of the most common questions about forming an LLC is: how long does LLC approval take? Naturally, registering a new legal entity requires you to file some paperwork and have it approved by the state, yet the total timeline is usually pretty reasonable.
The specific duration of your LLC registration process can vary from one state to the next, but on average, it takes between three and four weeks. Note that, in most states, you can pay a little bit extra to have the process expedited. An expedited process may take just a couple of days to complete.
What are the steps you must take to register an LLC?
Again, launching a new legal entity does require a little bit of documentation on the front end. While the specifics can vary from one state to the next, there are a few steps that are uniform across the board.
- Choose a name for your pharmacy business. The name you choose has meaning beyond marketing and advertising. It also has legal implications. Specifically, most states will require you to choose a name that isn’t already in use by an LLC in your state. There is usually an online directory you can use to check to see if your name is available.
- Select a registered agent. Every LLC is required by law to name a registered agent. This may be an individual or an organisation tasked with receiving legal correspondence on behalf of your business. Many states will allow you to serve as your own registered agent, while others will require you to hire a third-party service. Third-party services are usually quite affordable, sometimes costing no more than $50 annually. Outsourcing can be a good way to free up just a little bit more of your time for running your pharmacy business.
- File your paperwork. Next comes filing with your state. Specifically, LLCs must file Articles of Organisation. The specific requirements for this document can be a little bit fluid, but usually you’ll be asked to specify the name and mission of your business; your name and the names of any partners; and the name and contact information for your registered agent. As you file this paperwork, you’ll also have to pay a fee. Again, the amount can vary quite a bit, just depending on which state you’re in.
- Create an operating agreement. This isn’t a document that you file with the state, but it can be helpful as you run your business. Basically, an operating agreement is like a constitution for your company. It might outline things like: how partners share managerial duties; how partners share profits; how you’ll handle a partner leaving; and how you’ll decide to bring on new partners. This document is important, as it can help you avoid potential disputes with your partners down the road.
- Set up a bank account. In order to reap the advantages of your LLC (specifically personal liability protections), you’ll need to be careful about keeping your personal and business finances separate. One of the best ways to do so is by setting up a business bank account separate from your personal account.
- Get your EIN. One more thing you’ll need to do in order to get your pharmacy LLC off the ground: head to the IRS website to claim an employer identification number, or EIN. This is free for all US residents. Your EIN will be necessary before you can process payroll and before you can file your income taxes.
How long does it take to register your LLC?
- Every pharmacy business must have a legal structure, and the LLC is usually the best option.
- Specific guidelines for registering an LLC can vary by state.
- The total timeline may be three or four weeks.
- Expedited approval times are usually available for an added cost.
To find out more about what it takes to register an LLC, connect with the Secretary of State or Chamber of Commerce in your area today.
Amanda E. Clark is a contributing writer to LLC University. She has appeared as a subject-matter expert on panels about content and social media marketing.