New Hampshire is one of the smallest States in the country. It is one of the few States which does not impose any sales taxes. Agriculture, real estate, professional services, manufacturing, and healthcare are popular industries here.
If you’re thinking about forming an LLC in New Hampshire, you are at the right place! This article will guide you through the entire procedure to set up your company in the State and connect you to state resources.
Naming Your New Hampshire LLC
Naming your LLC is the first step in setting up your business. It is vital as your company’s identity is tied to its name. The title should be something catchy that appeals to your customer base. Ideally, it should correspond to your work’s nature and draw clients to your industry in the early stages when your business has not yet become popular.
However, you are not entirely at liberty to choose the name you want. New Hampshire has laid down several guidelines you must follow while selecting a name for your business.
The name you choose must include the words “limited liability company”, “limited company”, or one of its abbreviations (LLC or L.L.C.).
The name you select for your LLC should not give the impression that your entity is a government agency. For example, you cannot use terms like F.B.I, White House Office, State Department, etc.
It can not include certain restricted words such as “Bank” or “Credit Union,” written consent of concerned authorities and it may also involve additional paperwork and compliance requirements.
The title cannot include any professional designation without a prior license. For example, doctors, attorneys etc. Usage of these words requires a copy of the license to be submitted while reserving the name. Additionally, if you are setting up a Professional LLC, the name should end with the following words: “professional limited liability company”, ” P.L.L.C.”, or any similar abbreviation.
To know more, you can read the State’s Name Availability Guidelines.
Does Your Business Require a DBA?
A DBA (doing business as) refers to using a fictitious name, which enables you to operate your LLC under a different name. In New Hampshire, a DBA name is called “Trade Name.”
Remember, a trade name is best used for branding purposes and does not protect your personal assets. Your name currently for your LLC may not suit a new product or business area you are venturing into. In such cases, it would be better for you to operate under a new name that is more apt for your new product line or business area. This is where a trade name comes into play.
You can register the trade name you want with the Department of State; after that, it shall be valid for five years. After five years, you will have to renew your registration. The State will mail you a renewal notice and a renewal form six months before the renewal is due. You also have an option to change your DBA by applying here. The fee for this is $10.
Option 1: Apply for a DBA OnlineApply Online – OR –
Option 2: Apply for a DBA by Mail or In-PersonDownload Form
NH Dept. of State
107 N Main St, Rm 204
Concord, NH 03301-4989
State House Annex
3rd Floor, Rm 317
25 Capitol St, Concord, NH
Doing a Name Search and Name Reservation
Name Search is the fastest method to see if your chosen name is available and distinctive from the other registered names in the State. New Hampshire makes it easy by providing a database with all names. You should properly check the name selected for your LLC to avoid rejection later on. You can use New Hampshire’s Business Entity Search portal to do this.
In case you need more time to register your LLC, there is an option to reserve the name you have selected. You can apply to the Corporate Division of the office of the Secretary of State and reserve the name you have chosen for 120 days. There is also an option to renew the reservation for another 120 days.
Option 1: Reserve Your Name OnlineApply Online – OR –
Option 2: Reserve Your Name by MailDownload Form
NH Department of State
107 N. Main St., Rm 204
Concord, NH 03301
Registering Your Business Domain
The business domain for your LLC is the website URL customers will use to access your website. Before you select a name for your LLC, it is recommended that you ensure that the domain name you need is also available.
You can check currently available domain names.
Choose a Resident Agent in New Hampshire
A registered agent will be the point of contact between your company and the State authorities.
A registered agent is responsible for receiving all official communication addressed to your LLC and any process service concerning a lawsuit against your company. The appointment of a registered agent is mandated by law. As a result, if you do not have a registered agent, your LLC cannot be registered.
Who can be a Registered Agent ?
New Hampshire state statute Title XXVIII Section 304-C:36 lays down the eligibility requirements to be fulfilled to become a Registered Agent in the State. As a result, the following individuals can be designated as registered agents:
- Any person above 18 years of age and who is a legal resident of the State.
- Any domestic or foreign business enterprise is legally permitted to do business in the State. The entity’s business office and registered office should be the same.
This means you can appoint a friend or family member, an LLC member, or even yourself as the registered agent. Alternatively, you can also hire a professional service.
Individual v. Registered Agent Service
As a registered agent, the person must be available during business hours during working days to accept and sign any notices or legal documents addressed to the State. While you can be your own agent, having a registered agent service has its benefits.
A professional registered agent service ensures that you don’t fail to duly respond to any notice or other communication that may be sent to your LLC. The details of the registered agent are available in the public domain. So, if you are someone working out of your home or a private office, having a professional registered agent service will help you maintain privacy.
Besides, having a registered agent service allows you to focus your time and energy on growing your business. Ultimately, it’s a matter of choice, and you may decide on what suits your business best.
Filing your Certificate of Formation with New Hampshire
A certificate of formation is a legal document. To start an LLC in New Hampshire, you must file this document with the Department of State. Once this is completed, your LLC is registered and is recognized in the eyes of the law.
The first step is for you to obtain the form provided by the State. It is advised that you read the instructions for completing the form thoroughly. The following details should be duly mentioned in the certificate of formation:
- Entity Name.
- Domicile of the Business.
- Purpose of the business.
- Management of the business – Whether member-managed or manager-managed
Along with filing the document, you will also register the name of the LLC and appoint your registered agent. If you’ve already reserved a name for your LLC, you can attach a copy of the reservation certificate and the certificate of formation.
Option 1: File Your Certificate of Formation OnlineFile Online – OR –
Option 2: File Your Certificate of Formation by MailDownload Form
NH Dept. of State
107 N. Main St., Rm 204
Concord, NH 03301
As of now, the State does not have any provisions pertaining to expedient processing of your Certificate of Formation.
Public Notice of Formation
As of now, the State does not have any provisions pertaining to a mandatory public notice of formation for your LLC.
Create the Operating Agreement for your New Hampshire LLC
An operating agreement is a legal document that provides the framework for an LLC’s internal operations and functioning. It explains the administrative structure of your company and may be drafted to suit the specific needs of your business.
Like most other states, the State of New Hampshire does not require an operating agreement. But it is always a good idea to have one. It offers credibility to your enterprise and helps to avoid internal disputes.
There is no set formula for drafting an operating agreement. However, irrespective of the nature of your business, it shall be advisable for your operating agreement to cover the following matters:
- Organization Details
- Duties of Members and Managers
- Management and Voting
- Capital Contributions
- Division of Profit and Losses
- Bookkeeping Procedures
- Procedure for adding new members
- Requirements concerning Meetings and Procedures thereof
The above points are not exhaustive, and you may include other provisions also that you deem fit for the administration of your company.
Writing the Operating Agreement Yourself v. Hiring a Service
It is highly advisable for your LLC to have a written operating agreement. There are two ways to draft an operating agreement. You can choose to write the agreement yourself, or you may use any of the readily available templates online.
The other option is to hire an attorney or a professional to do this for you. Experts in the laws of New Hampshire, these attorneys or professionals will help you draft an operating agreement that suits the needs specific to your business model.
Limits of Operating Agreement
While there are no prescribed formats for drafting an Operating Agreement, be sure not to include any provisions in the agreement that are inconsistent with New Hampshire’s laws.
Obtaining an EIN for your New Hampshire LLC
EIN stands for Employer Identification Number. It is a unique nine-digit number given by the Internal Revenue Service (IRS) to a corporate entity. The IRS uses the EIN to identify an operating business entity for taxation purposes.
You will need an EIN to open a business bank account, apply for business permits, and file your tax returns as a business owner. You will also need it if your company wants to hire employees. Additionally, all multi-membered LLCs should obtain an EIN.
Option 1: Request an EIN from the IRSApply online – OR –
Option 2: Apply for an EIN by Mail or FaxDownload form
Internal Revenue Service
Attn: EIN Operation
Cincinnati, OH 45999
Fax: (855) 641-6935
File Annual Reports in New Hampshire
An annual report is a document your LLC should file with the State annually. It is used by the authorities to get information about all the business entities operating in the State. It is important to ensure the annual report is filed on time. In New Hampshire, businesses that miss the deadline for filing the annual report are penalized with a $50 fine. In addition, not filing the report for two years will lead to your business getting shut down by the State.
You can file the annual report online on the Secretary of State’s website. The filing fee is $100 (non-refundable). The due date for the same stands on the 1st of April every year. So, let us say your LLC was formed on the 30th of December, 2020; your due date for filing the annual report will be the 1st of April, 2021.
Tax liability for your New Hampshire LLC
The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:
- Sole-proprietorship: a business owned by a single person
- Partnership: a business owned by multiple people
- C – Corporation: income is split or segregated for taxation
- S – Corporation: tax liability is split between the business and its owners
Federal Tax Liability
Your federal income tax liability is the amount of tax you owe the Federal Government. You must pay Federal Self-Employment Tax (presently 15.3%) on the profits you take from your LLC. Additionally, you have also to pay Federal Income Tax. The income tax you have to pay will vary depending on your income, filing status, deductions, etc. However, federal corporate taxes must be paid if you treat your LLC as a corporation for tax purposes.
If you’re a single-member LLC, your default taxation type will be that of a sole proprietor or ‘disregarded entity’. The LLC has to report its activities under Schedule C, Schedule E and/or Schedule F of Form 1040.
If your LLC has more than one member, it will be taxed as a ‘partnership’ by default. In this case, apart from filing Form 1040, you’ll have to file your partnership return in Form 1065 and provide information in K-1 of each partner.
If you would like your LLC to be taxed like a C-Corp or S-Corp, you can do so by filing Form 8832 and Form 2553, respectively.
State Tax Liability
Apart from the Federal taxes, your LLC is also subject to certain State taxes, depending on your business area and other thresholds. Though the State does not impose any sales tax, it does impose certain state taxes directly on certain LLCs with incomes or profits above prescribed limits.
Your LLC will be required to pay a Business profit tax if your gross business income before expenses exceeds $50,000.
Similarly, business enterprise tax will apply to LLCs with more than $200,000 as gross business receipts. For more information regarding the State Taxes, you may visit New Hampshire’s Department of Revenue Administration website.
Apart from the above-mentioned taxes, if your LLC hires employees, you will also be required to sign up for Unemployment Insurance Tax.
Permits and Licenses
It is important to determine if your business operates in a field that requires licenses and permits on a federal, state, or county level. Failure to obtain these permits beforehand might result in the dissolution of your business and various fines.
Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.
Some business activities requiring Federal Licenses and Permits are:
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics.
New Hampshire does not have a State Business Permit. Additionally, since the State does not impose any sales tax, you are not required to get any seller’s permit. However, if your business is engaged in certain specified professions, you may need to obtain certain licenses and permits. You can visit the New Hampshire Office of Professional Licensure and Certification website for more information.
Depending on where you operate your business, you may also be required to get the local government’s license and permit. In Manchester, businesses are required to have a specific city license. To know more about local licensing requirements, get in touch with the office of your local administration.
For more information regarding;
Business Bank Account & Phone Number
Consider opening a separate business bank account. This will ensure that your personal assets do not get attached to your business and protect them from any risk in case of insolvency or legal suits.
A separate bank account qualifies your business for several loans, permits, and licenses. It creates goodwill as treating your LLC as a separate entity increases reliability and professionalism.
The documents required for opening a business bank account in New Hampshire include a Copy of the Certificate of formation, EIN Trade Name Registration details (if you have opted for the same), a Copy of Business licenses and permits, etc.
Using your phone number for your LLC can prove to be very inconvenient. Obtaining a business phone number will also help maintain privacy. Alternatively, you may hire a phone answering service that will ensure professionalism and reduce the risk of missing important calls.
The most attractive feature of forming an LLC in New Hampshire is the opportunity to benefit from the State’s business community.
The State is well equipped with giant transportation infrastructure, a qualified workforce, varying kinds of subsidies, and loans. It also has various programs, such as the New Market Tax Credits and the New Hampshire Research and Development Tax Credit which aim to help small and medium-sized businesses grow and expand.
Get in touch with your local county or city government office to determine if your LLC is eligible for any of these incentives.
You can follow the above steps and set up your LLC in the State. In case you find it cumbersome, you may always hire the services of professionals who offer to set up your LLC at reasonable prices. We wish you and your business the very best!