Getting to Work - Creating an LLC & Decisions

Starting a Native American Jewelry Business
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Getting to work!

Now that I’ve chosen the name — Daisy Cowboy — the next step is making sure I can legally use it. I started by heading to the New Mexico Secretary of State Business Search to see if anyone else had already claimed it.

The name was available! So I went ahead and registered it as a Domestic Limited Liability Company (LLC) in New Mexico.

Tip: Every state has a similar site where you can search available business names and register an LLC. If you’re not in New Mexico, check with your Secretary of State’s website.

The setup process walks you through everything. The most important details are:

  • Choosing your business name
  • Assigning a registered agent (this is someone with a physical address who can accept legal documents on behalf of your business)

Sometimes your LLC gets approved the same day, other times it can take a few days. Once your LLC is formed, the next stop is the IRS website to get your Employer Identification Number (EIN).

You’ll need your EIN to open a business bank account, which is essential for keeping your startup expenses separate and organized.

Right now, I’m starting to build inventory, hire help with the website, and buy some initial software tools — so a business bank account is a must.

Choosing How You Want to Be Taxed

When you apply for an EIN, you’ll also need to decide how your new LLC will be taxed. LLCs are flexible — you’ve got options:

:small_blue_diamond: Sole Proprietorship (single-member LLC by default)

Pros:

  • Easy to set up
  • Pass-through taxation (you pay income tax on profits personally)

Cons:

  • If you are profitable the self-employment taxes could be hefty

:small_blue_diamond: Partnership (if there are multiple owners)

Pros:

  • Shared skills and resources
  • Pass-through taxation

Cons:

  • Partners are personally liable
  • Can lead to disagreements
  • Ends if one partner leaves

:small_blue_diamond: S-Corporation

Pros:

  • Pass-through taxation with potential for self-employment tax savings
  • Limited liability
  • Owners can be employees

Cons:

  • More paperwork
  • Requires a “reasonable salary”
  • Some ownership restrictions

:small_blue_diamond: C-Corporation

Pros:

  • Strong liability protection
  • Easier to raise money
  • Business continues regardless of ownership changes

Cons:

  • Double taxation
  • More complexity and regulation

For this business — since it’s being used as a teaching and marketing tool — I’ve chosen to be taxed as a sole proprietor for the first year (the easy one). You can always change your election later if your business evolves.

What questions do you have about setting up an LLC or choosing a tax structure? If you’ve already started this process, I’d love to hear your experience.

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