If you’re running a marketing or advertising agency, you’ve probably spent a lot of time thinking about the best way to structure your business.

Maybe you’re just getting started, or perhaps you’re in the middle of a reorganization. 

Either way, understanding why a Limited Liability Company (LLC) could be a game-changer for your business is crucial.

And if you’re unsure about where to start, don’t worry — book a free consultation with our doola experts.

They’ll give you the rundown on everything you need to know about LLCs and getting your business set up right.

Why an LLC Fits Like a Glove for Marketing & Advertising Agencies

Now, let’s look at a few reasons why this business structure might be the best fit for your marketing or advertising agency.

✅ Protection from Liability

One of the biggest reasons agency owners choose an LLC is the protection it offers.

In the fast-paced, high-stakes world of marketing and advertising, where client relationships are everything, things can sometimes go sideways.

Maybe when a campaign doesn’t perform as expected or a client decides to take legal action over a creative dispute.

Without an LLC, your personal assets — your home, savings, and even that prized painting collection — could be at risk.

But with an LLC, there’s a clear separation between your personal finances and your business liabilities.

Which means if things go south, only the business’s assets are on the line. 

✅ Pass-Through Taxation

Taxes — nobody likes them, but we all have to pay them. The good news is that an LLC offers a tax structure that can be beneficial for small to medium-sized agencies.

With an LLC, the business itself doesn’t pay federal income taxes. Instead, profits and losses pass through to the owners, who report them on their personal tax returns.

This can be a huge advantage, especially when you’re just starting. You can avoid the dreaded “double taxation” that corporations face, where both the company and the owners are taxed on profits.

It’s like having a little extra room in your budget to reinvest in your agency — whether that’s hiring a new creative director or investing in cutting-edge marketing tools.

✅ Flexibility in Management 

Another major perk of an LLC is the flexibility it offers in management. Unlike corporations, which require a board of directors, regular meetings, and extensive record-keeping, an LLC allows you to run your business your way.

If you’re a solo entrepreneur, you can be the sole member and manager of your LLC. If you have partners, you can decide how responsibilities and profits are shared. 

Want to bring in investors? You can do that too, without the same level of formalities required by a corporation.

This flexibility means you can focus more on what you love — crafting innovative campaigns, brainstorming the next big idea, or building lasting relationships with your clients—rather than getting bogged down in administrative details.

✅ Credibility and Professionalism

In the marketing and advertising world, perception is everything. Clients want to work with agencies they trust, and having an LLC can enhance your credibility.

It shows that you’re serious about your business and that you’ve taken steps to protect it legally and financially.

An LLC also adds a level of professionalism to your brand.

Plus, it signals that you’re not just a freelancer working out of your garage (even if you are) — you’re a legitimate business entity with the stability and structure to back up your creative genius.

How an LLC Empowers Your Growth

Now that we’ve covered why an LLC is a great choice, let’s explore how it can actually help you grow your marketing or advertising agency.

Easier Access to Funding

As your agency grows, there may come a time when you need to seek outside funding, whether through a bank loan or investors. Having an LLC can make this process easier. 

Lenders and investors are more likely to take you seriously when you have a formal business structure in place.

Plus, because an LLC is a separate legal entity, it can establish its credit rating independent of your personal credit. 

This means you can potentially secure better terms and interest rates, giving you more fuel to pour into expanding your team, launching new services, or scaling your operations.

Attracting Top Talent

An LLC can make your agency more attractive to potential employees by offering them a sense of stability and security.

Moreover, an LLC structure allows you to create equity-based compensation plans, like offering ownership stakes or profit-sharing options. 

This not only incentivizes your team but also aligns their interests with the success of the agency, creating a collaborative environment where everyone is working towards the same goals.

Simplified Compliance

Compliance is a word that can strike fear into the heart of any business owner. The good news is that compliance requirements are generally simpler and less burdensome for an LLC than for a corporation.

You won’t need to hold formal annual meetings or maintain extensive records.

While you’ll still need to file annual reports and pay certain fees, the process is more straightforward, allowing you to spend less time on paperwork and more time creating impactful campaigns and driving results for your clients.

How to Get Started and Form Your LLC

Convinced that an LLC is the way to go? 

Here’s a step-by-step guide on how to form your LLC, with detailed insights tailored for marketing and advertising agencies — and how doola can simplify the process at each stage.

Step 1: Choose Your State

The state you choose to form your LLC in will determine the legal and financial obligations you’ll face, including filing fees, annual reports, and state taxes. For most agency owners, forming an LLC in the state where they primarily operate makes the most sense. 

However, if you’re working with clients across the country, some states might offer more favorable conditions. 

So here’s what you should do:

✅ Research Your Home State: Start by researching the LLC formation requirements in your home state. This includes filing fees, ongoing maintenance costs, and any state-specific tax obligations.

✅ Consider Other States: If you’re considering forming your LLC in a different state (like Delaware or Nevada, known for being business-friendly), weigh the pros and cons. 

Consider factors like tax benefits, privacy protections, and the administrative burden of registering as a foreign LLC in your home state.

✅ Make Your Decision: Once you’ve gathered the necessary information, decide where to form your LLC based on your specific business needs and long-term goals.

How doola helps?

doola simplifies this entire process by offering detailed guidance on choosing the right state for your LLC. We provide insights into the pros and cons of different states, ensuring you make an informed decision that aligns with your business strategy.

Step 2: Pick a Name

Your agency’s name is not just a label; it’s your brand identity. It needs to be unique, memorable, and reflective of your agency’s values and services. A good name can enhance your brand’s visibility and help you stand out in the competitive marketing and advertising industry.

A few ways to pick the best names for your LLC:

Brainstorm: Start with a brainstorming session. Think about what makes your agency unique and how you want to be perceived in the market. Consider names that convey creativity, innovation, and professionalism.

Check Availability: Once you have a list of potential names, check their availability. You’ll need to ensure that the name isn’t already in use by another business in your state. You can usually do this by searching your state’s business name database online.

Reserve Your Name (Optional): If you find the perfect name and want to ensure it’s available when you’re ready to file your LLC, some states allow you to reserve the name for a small fee.

Consider a Trademark: If your name is unique and you plan to use it across the country, consider registering it as a trademark. This provides additional legal protection and ensures that no one else can use your name in the same industry.

How doola Helps?

doola can assist with checking the availability of your chosen name and even help you reserve it in your state. If you’re considering a trademark, Our experts can guide you through the entire formation process, ensuring your brand is fully protected.

Worth Knowing: Should You Form an LLC for Each Rental Property?

Step 3: File the Articles of Organization

The Articles of Organization is the official document that creates your LLC.

It’s a critical step because it legally establishes your business entity, providing you with the legal framework needed to operate your agency. 

Before you file, gather all necessary information.

This typically includes your LLC’s name, principal address, the names and addresses of the owners (known as members), and the name and address of your registered agent. 

A registered agent is a person or company responsible for receiving legal documents on behalf of your LLC. This could be you, another member, or a professional service. The registered agent must have a physical address in the state where your LLC is formed.

Next, you can file the Articles of Organization online through your state’s Secretary of State website. Some states may allow you to file by mail or in person.

You’ll need to pay a filing fee, which varies by state. Or reach out to doola and we’ll take care of the headache of filing Articles of Organization.

And once you are done with the filing, you’ll receive a confirmation from the state, which might take a few days to several weeks.

This confirmation typically includes a Certificate of Formation, officially recognizing your LLC.

How doola Helps?

doola simplifies the filing process by handling the paperwork on your behalf.

We ensure that all necessary information is correctly submitted and follow up to confirm your LLC’s formation, so you can focus on your agency’s operations.

Step 4: Create an Operating Agreement

While not required in all states, an Operating Agreement is a crucial document for your LLC. It outlines how your agency will be run, detailing the roles of each member, how decisions will be made, and how profits and losses will be distributed. 

This document helps prevent misunderstandings among members and ensures that everyone is on the same page.

Here’s how you need to create an operating agreement:

Define Roles and Responsibilities: Start by defining each member’s role within the LLC. Who will manage the day-to-day operations? Who will handle client relations, finances, or creative direction? Clearly outlining these roles will help avoid conflicts and ensure smooth operations.

Establish Decision-Making Processes: Decide how key decisions will be made. Will decisions require unanimous consent, a majority vote, or something else? This section of the agreement is critical for resolving disputes.

Profit and Loss Distribution: Determine how profits and losses will be distributed among members. This could be based on each member’s ownership percentage or another method agreed upon by all members.

Include Contingencies: What happens if a member wants to leave the LLC, or if new members want to join? Your Operating Agreement should include provisions for these situations to ensure a smooth transition and continuity of operations.

How doola Helps?

doola can assist you in drafting a comprehensive Operating Agreement that reflects the unique needs of your agency. 

Step 5: Obtain an EIN (Employer Identification Number)

An Employer Identification Number (EIN) is like a Social Security number for your LLC. It’s essential for opening a business bank account, filing taxes, and hiring employees.

Without an EIN, you won’t be able to operate your agency legally at a federal level.

The fastest way to obtain an EIN is to apply online through the IRS website. 

The process is straightforward, and you’ll receive your EIN immediately upon completion.

Once you receive your EIN, keep it safe. You’ll need it for almost every aspect of running your business, from filing taxes to applying for loans.

Here’s how doola helps:

doola streamlines the EIN application process, ensuring that your agency gets its EIN quickly and hassle-free.

We guide you through the necessary steps, making sure all required information is provided correctly.

The only guide you’ll ever need on EIN: How to Apply for an EIN

Step 6: Register for State and Local Taxes

Depending on where your agency operates, you may need to register for various state and local taxes. This could include sales tax, employment tax, and other business-related taxes. 

Understanding and complying with your tax obligations is crucial for avoiding penalties and keeping your business in good standing.

How doola Helps?

doola offers assistance with registering for state and local taxes, ensuring that your agency is compliant with all relevant tax regulations.

We also offer guidance to manage tax withholdings for your employees.

Step 7: Comply with Other Legal Requirements

In addition to taxes, your agency may need to meet other legal requirements, such as obtaining business licenses or permits. These requirements vary by industry and location, so it’s essential to understand what applies to your specific situation.

Here are a few ways to be compliant with the legal elements involved in an LLC:

Research Local Regulations: Start by researching the legal requirements for operating a marketing or advertising agency in your area. This could include zoning laws, business licenses, or industry-specific permits.

Obtain Necessary Permits: If your agency needs specific permits or licenses, apply for them through the appropriate local or state agencies. The requirements and fees will vary depending on your location and the nature of your services.

Maintain Compliance: Once you’ve obtained the necessary permits, make sure you stay compliant with any ongoing requirements. This might include renewing licenses, adhering to local regulations, and submitting reports.

And if you have doola by your side, you don’t have to worry about anything. Here’s how we can help:

We can assist you in identifying and obtaining the necessary permits and licenses for your agency.

Plus, we offer ongoing compliance support to help you maintain your legal standing, ensuring that you meet all local, state, and industry regulations.

Read more: 6 Common Types of Business Licenses

Step 8: Open a Business Bank Account

Opening a business bank account is a crucial step in separating your personal and business finances. This not only helps you manage your agency’s finances more effectively but also ensures that your personal assets remain protected under the LLC structure.

Consider the following before you decide to open up a business bank account:

Choose a Bank: Start by researching banks that offer business accounts. Look for banks that understand the needs of small businesses and offer features like low fees, easy online banking, and robust customer support.

We at doola recommend a virtual bank like Mercury due to lower fees. In addition, Mercury lets non-US founders open a US bank account remotely without visiting the US.

Gather Necessary Documents: To open a business account, you’ll typically need your LLC’s EIN, Articles of Organization, Operating Agreement, and a resolution from the members authorizing the account (if applicable).

Open the Account: Visit the bank or apply online to open your business account. Consider setting up a business savings account as well to manage taxes or unexpected expenses.

Separate Finances: Once your account is open, make sure to use it exclusively for business transactions. This will simplify your bookkeeping and help maintain the legal separation between your personal and business finances.

How doola Helps?

doola can guide you in choosing the right bank for your business account and provide you with the necessary documentation to streamline the process.

We ensure that you have everything you need to open an account quickly and start managing your finances separately from your personal funds.

Step 9: Maintain Your LLC

Forming an LLC is just the beginning. To keep your LLC in good standing and continue enjoying its benefits, you’ll need to maintain it by fulfilling ongoing legal and administrative obligations. 

Basically, you need to do the following to maintain the active status of your LLC:

File Annual Reports: Most states require LLCs to file an annual report. This report updates the state on your LLC’s status, including any changes to ownership, address, or management. Failing to file on time can result in penalties or even dissolution of your LLC.

Pay Required Fees: Along with the annual report, you may need to pay an annual fee to keep your LLC active. The amount varies by state, so be sure to check the requirements in your area.

Keep Records Updated: Maintain accurate records of your LLC’s activities, including financial statements, meeting minutes (if applicable), and any changes to the Operating Agreement. This is especially important if your LLC is ever audited or involved in a legal dispute.

Stay Compliant with Tax Obligations: Ensure that you’re staying up to date with all tax filings and payments, including federal, state, and local taxes. Regularly review your tax strategy to see if any changes in your business require adjustment

How doola can assist you through the entire LLC formation and maintenance process?

We offer personalized LLC maintenance services that take the stress out of staying compliant. Our experts are here to handle your annual reports, remind you of filing deadlines, and provide support for any necessary updates to your LLC’s structure, so you can focus on growing your agency.

Why Wait? Get Your Marketing Agency on the Fast Track with doola

See? That wasn’t so tough!

If you’re running a marketing agency, setting up an LLC doesn’t have to be a hassle — especially when you have the right support. You’ve already seen the huge benefits an LLC can bring, so why wait?

It’s time to turn those big dreams into reality with doola.

And here’s the best part: doola does more than just help you form your LLC. We’re here to keep your business running smoothly with bookkeeping, tax preparation, and making sure you stay compliant.

From getting your EIN to setting up your business bank account and handling state and local taxes — we’ve got it covered.

We also take care of the long-term essentials, like filing annual reports and renewing licenses.

So, ready to get started? Book a free consultation with us today, and let’s make something great happen.