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Should I Set Up an LLC for My Junk Removal Business or Use a C-Corp?

It is important to note that your choice for filing for an LLC for your junk removal business or C-Corp will depend on your preferences as it relates to the business’s size, growth prospects, ownership structure, taxation preferences, and of course the overall vision, mission, goals and objectives of the business.

No one can help you decide that, hence you need to have a proper understanding of what an LLC and C-Corp are all about.

What is an LLC?

An LLC which is also known as a limited liability company is a business structure in the United States that prevents individuals from being liable for the company’s financial losses and debt liabilities.

It protects its owners from personal responsibility for its debts or liabilities. LLCs (Limited liability companies) are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

Note that the cost to form an LLC in the United States depends on the state where you want to form the LLC. You could pay as much as $500 or as little as $40 to file your LLC paperwork in the United States.

What is a C-Corp?

A C-Corp or C corporation as it is also known is a legal business structure in the United States in which the owners, or shareholders, are taxed separately from the entity. C corporations are the most predominant of corporations, and they are also subject to corporate income taxation.

Comparison of Using LLC Vs C-Corp for Junk Removal Business


  • LLC: LLCs typically offer pass-through taxation, where business profits and losses are reported on the owner’s tax returns. This can simplify tax filing and potentially result in lower overall taxes.
  • C-Corp: C-Corps are subject to double taxation, where the corporation pays taxes on its profits, and shareholders pay taxes on dividends received. This can result in higher overall taxes, especially for smaller businesses.

Liability Protection:

  • LLC: LLCs offer limited liability protection, separating personal assets from business debts and liabilities. Owners (members) are generally not personally responsible for business debts.
  • C-Corp: C-Corps also provide limited liability protection to shareholders, shielding personal assets from business liabilities. However, strict adherence to corporate formalities is necessary to maintain this protection.

Management Flexibility:

  • LLC: LLCs offer more flexibility in management structure and decision-making processes. They can be managed by members or designated managers, allowing for a simpler organizational structure.
  • C-Corp: C-Corps have a more rigid management structure with shareholders, directors, and officers. Decision-making processes are typically more formalized, which may be beneficial for larger businesses but can be burdensome for smaller ones.

Ownership and Capital Structure:

  • LLC: LLCs have more flexibility in ownership and capital structure, with no restrictions on the number or type of owners (members). Capital contributions and profit distributions can be structured to suit the needs of the business and its owners.
  • C-Corp: C-Corps can have an unlimited number of shareholders, making them suitable for businesses planning to raise capital through public or private investment. However, ownership and capital structure are more complex, with the issuance of shares and compliance with securities regulations.

Investor Attraction:

  • LLC: LLCs may be less attractive to investors seeking to invest in startups or high-growth businesses due to their pass-through taxation and less formal structure.
  • C-Corp: C-Corps are often preferred by investors because of their ability to issue different classes of stock, facilitate stock options, and provide the potential for capital appreciation.

Exit Strategies:

  • LLC: Exiting or selling an LLC interest can be more straightforward than selling a C-Corp due to fewer regulatory requirements and a simpler ownership structure.
  • C-Corp: Selling a C-Corp typically involves more regulatory compliance, such as securities laws, but may offer more flexibility in structuring the sale and the potential for higher valuation.

State Requirements and Costs:

  • LLC: LLCs generally have fewer ongoing compliance requirements and lower formation and maintenance costs compared to C-Corps.
  • C-Corp: C-Corps have more stringent compliance requirements, such as holding annual meetings, maintaining corporate records, and filing separate tax returns, which can result in higher administrative costs.

Steps to File an LLC for a Junk Removal Business

When it comes to filling an LLC for a junk removal business in the United States, it is important to note that each state has its filing requirements and fees.

However, this is the basic that is expected from anyone who wants to form an LLC for a junk removal business in the United States of America;

STEP 1: Choose A Name for Your Limited Liability Company (LLC)

Under most states’ law, an LLC’s name must contain the words “Limited Liability Company” or the abbreviations “LLC” or “L.L.C.”

Your LLC’s name may not contain a word or phrase that indicates or implies that it is organized for a purpose not contained in its articles of organization.

Your LLC’s name must be distinguishable from the names of other business entities already on file with the Secretary of State.

You must reserve your LLC’s name with the Secretary of State before filing your LLC formation documents. You may do so online for a $28 fee depending on the state.

Your proposed name will be automatically checked for availability and you will receive your name reservation immediately at the end of the process.

Alternatively, you can submit a Name Reservation Request Form for Domestic Entities form by postal mail to the Secretary of State’s office. This requires payment of a $10 fee.

Before submitting the form, you should search the Secretary of State’s business name database to be sure the proposed name is available.

To give you a better understanding, here are some of the naming guidelines:

  • Your company name must contain the phrase “Limited Liability Company” or any of its abbreviations (L.L.C. or L.L.C.)
  • Your company should not include words or phrases that might make the public confuse your company with a government agency such as F.B.I., State Department, NASA, or Treasury. Examples of such restricted words include Bank, University, and Attorney.
  • If you want to make use of restricted words like Attorney, Bank, and the rest, you will need more paperwork as well as a licensed individual such as a lawyer or doctor to be a member of your L.L.C.
  • You can check if the name you intend to use is available.

You can check if the name is unique by searching the name on the State’s website. Also, make sure your business can use its name as a web domain.

Even though creating a business website is not on your plan, you should purchase the URL to stop others from using it. After you have registered a domain name, consider creating a professional email account.

A professional email that makes use of your domain name is vital to establishing trust between your business and its customers.

Note that you don’t have to use your LLC’s official legal name registered in your Articles of Organization when you do business in the real world.

Instead, you can use a trading name, also called a “DBA” (short for doing business as), assumed name, or fictitious business name. To do so in most states, you simply start using the trade name to identify your LLC in the state.

You may also apply to Register a Trade Name with the Secretary of State by mail and pay a $30 fee. Registration is not mandatory or confer any legal rights, but does alert others the name is in use in your state.

Step 2: Appoint A Registered Agent in Your State

Next, you are required to choose a registered agent for your L.L.C. in your state. A Resident Agent is the person or company who receives your LLC’s documents, notices, and legal mail (called Service of Process).

The Resident Agent must have an actual street address in their state (PO boxes are not allowed by the state). Picture your registered agent as your company representative to the state.

Please note that you, your friend or family members, or a commercial resident agent are qualified to be your LLC’s Resident Agent.

Step 3: Prepare and File a Certificate of Formation with the County Probate Court

You are expected to prepare and file a certificate of formation for your LLC as required by your state. For example, an Alabama LLC is created by filing a Certificate of Formation.

Unlike most states, the certificate is not filed with the Secretary of State. Instead, you must file it by postal mail with the Office of the Judge of Probate in the county where the LLC’s initial registered office is located.

The Probate Court files the form and provides you with a stamped copy. The court then transmits the certificate to the secretary of state along with your fee.

A list of the names and addresses of the probate judges for every Alabama county can be found on the Alabama Secretary of State website. The certificate of formation must include the following information:

  • the LLC’s name
  • the name and address of the LLC’s registered agent
  • an indication whether the LLC is a series LLC, professional LLC, or non-profit LLC by checking the appropriate box–not applicable to most LLCs
  • the effective date the LLC will begin is different from the Certificate of Formation filing date, and
  • the signature of the organizer or attorney-in-fact.

A copy of the Name Reservation certificate from the Secretary of State must be attached. The filing fee is $100 to the Secretary of State plus a separate Probate Court filing fee which is at least $50.

Step 4: Prepare an Operating Agreement

An LLC operating agreement is required in some states. This is an internal document that establishes how your LLC will be run. It sets out the rights and responsibilities of the members and managers, including how the LLC will be managed.

It can also help preserve your limited liability by showing that your LLC is truly a separate business entity. In the absence of an operating agreement, state LLC law will govern how your LLC operates.

Step 5: Acquire an Employer Identification Number

An Employer identification number (E.I.N.)  also known Federal Tax Identification number is a 9-digit number similar to a social security number.

The Employer identification number will be used to identify your business. It is like a social security number for your company.

An Employer Identification Number is essential because you will need it to open a business account for your company, to hire employees as well as tax purposes. You can obtain your E.I.N. from the I.R.S. after creating your company.

You can do it via mail or online. Note: It won’t cost you a dime to get an E.I.N. from the I.R.S. You can obtain an EIN from the IRS either

  • Via mail (approval takes 4 weeks)
  • Via fax (approval takes 4 business days)
  • Via online application (approval is instant at the end of the application)

Step 6: File State Tax Return/Annual Report

Some states require LLCs to file a combined Business Privilege Tax Return and Annual Report with the Department of Revenue each year. The initial report (Form BPT-IN) is due two and one-half months after your LLC is formed.

Subsequent reports (Form PPT) are due on or before three and one-half months after the beginning of the LLC’s taxable year. A minimum $100 tax must be paid each year.

For details and tax forms, see your state’s Department of Revenue website. Additional tax and regulatory requirements may apply to your LLC. These may include:

EIN: If your LLC has more than one member, it must obtain its own IRS Employer Identification Number (EIN). This is so even if it has no employees.

If you form a one-member LLC, you must obtain an EIN for it only if you elect to have it taxed as a corporation instead of a sole proprietorship (disregarded entity). You may obtain an EIN by completing an online EIN application on the IRS website. There is no filing fee.

Business Licenses: Depending on the type of business and where it is located, your LLC may need to obtain other local and state business licenses. Check with the county probate office or county licensing commission for the county where your LLC office is located.

LLC Records: An LLC must keep the following records in its principal office and make them available for inspection by LLC members:

  • a current list of the full name and last known business or residence street address of each member, and each manager, if any
  • a copy of the filed articles of organization and all amendments, and executed copies of any powers of attorney under which any documents have been executed
  • copies of the LLC’s federal, state, and local income tax returns and reports, if any, for the three most recent years
  • copies of any then effective operating agreements including any amendments, and
  • copies of any financial statements of the LLC for the three most recent years.

Step 7: Securing Business Licenses and /or Permits

The type of business licenses and/or permits your LLC will need to legally operate will depend on its location and the industry it is involved.

Please note that to operate your LLC you must comply with federal, state, and local government regulations. For example, restaurants likely need health permits, building permits, signage permits, etc.

The details of business licenses and permits vary from state to state. Make sure you read carefully. Don’t be surprised if there are short classes required as well. Fees for business licenses and permits will vary depending on what sort of license you are seeking to obtain.

Step 8: Sort – Out Taxes

Federal taxes: LLCs in most states have what’s called “pass-through” taxation. This means your LLC does not pay separate federal taxes; instead, all its profits/losses “flow-through” to you and are filed with your tax return (Form 1040), usually on a Schedule C.

State and local taxes: In addition to your Personal Property Tax Return, your LLC may also need to file and pay additional taxes, both at the state level and the local level (county, city, township, etc.)

Depending on the nature of your business, you may be required to register for one or more forms of state tax.

Sales Tax: Since you will be selling a physical product, you’ll typically need to register for a seller’s permit. This certificate allows a business to collect sales tax on taxable sales.

Sales tax, also called “Sales and Use Tax,” is a tax levied by states, counties, and municipalities on business transactions involving the exchange of certain taxable goods or services.

Employer Taxes: If you have employees, you will have to register for the Unemployment Insurance Tax, and the Employee Withholding Tax through the Department of Labour, Licensing, and Regulation.

Step 9: Open Your LLC Bank Account

To keep your business finances apart from your finances, you should open a separate bank account for your LLC. It will indeed help you maintain your personal liability protection.

A separate bank account helps maintain your liability protection and it also makes business accounting and taxes a lot easier.

The items needed to open an account in most states are your approved Articles of Organization, EIN Confirmation Letter from the IRS, and your driver’s license or passport. We also recommend calling the bank ahead of time to find out if additional documents are required.

Tips: Look for free business checking: Call a few banks in your state for comparison. Some banks charge monthly maintenance fees for your LLC’s checking accounts, others don’t.

Debit card: A debit card for your LLC will be issued when opening the account.

Credit card: If you want to start building business credit for your LLC (or get travel and cashback rewards), you can get a credit card or two for your LLC. We recommend using to find a business credit card.

Step 10: Apply and Obtain Your Business Phone Number

Instead of using your home telephone number or your cell phone, you can purchase an affordable “virtual business number” specifically for your LLC.

You can set this virtual business phone up to forward to your cell phone, go through voice prompts, or configure it any way you’d like. You can check out as they have the cheapest plans and their customer service is excellent.

They offer local phone numbers as well as 1-800 toll-free numbers. You can easily set up call forwarding and pre-recorded prompts, and get voicemail messages forwarded to your email.

Step 11: File Your LLC Biennial Report

In some states, an LLC may face fines and even automatic dissolution when they miss one or more state filings. When this happens, LLC owners risk the loss of limited liability protection.

A quality registered agent service can help prevent this outcome by notifying you of upcoming filing deadlines and by submitting reports on your behalf.