The most popular legal business structure for small businesses at present is the Limited Liability Company (LLC). There are several advantages with LLC which makes it preferred over corporations and sole proprietorship such as the tax benefits and flexibility in reporting requirements. Furthermore, the freedom in running and managing the business under an LLC structure is an attractive lure for businesses. Setting up the LLC is quite straightforward and simple, however based on the state’s law there might be some variations in the detail procedures. From our motivation to help your business flourish with success, here is step by step guide to plan your LLC formation.
Step 1. Collect a copy of the LLC Articles of Organization Form
At first, you will have to get a copy of the LLC Articles of Organization form from the office of the Secretary of State at the state where you are going to operate your business. There may be a separate office responsible to deal with business issues in some states but that is an exception. You may get the copy of the form online too.
Step 2. Choose A Unique Name For Your LLC
Check the state’s regulations for the naming of a company at your place. Moreover, check the names of other similar companies in that area to avoid any overlap and confusion that could even take things down to an infringement claim. Also check for the availability of the domain name for your company’s website.
Step 3. Decide The Registered Agent
Almost all the states will ask for a registered agent or statutory agent during the formation of an LLC. Any sane person above 18 living in the same state can act as your registered agent, who will receive and deliver the legal documents on behalf of the LLC. You may choose a member of the LLC for this role or can pay a company offering the service at your locality.
Step 4. Fill up the form for LLC Articles of Organization
The form asks some simple and straightforward questions such as the names of members of your LLC, the address of company’s principal office and the name and address of the registered agent etc. The Articles of organization doesn’t normally require any detail operation and management procedure of your business.
Step 5. File your LLC Articles of Organization form
In general, you will have to file the form along with the LLC formation fee to the same office from where you collected the form at the beginning. The state office will issue a formal receipt for the submission of your legal documents, which serve as the legal note for the registration and you can use this receipt in opening the bank account and formalities. The registration fee varies from state to state, and it may include additional corporate tax in some states. Find the amount you have to pay which ranges between only $70 up to $900. You can know how to apply for an LLC in details.
Step 6. Prepare the LLC Operating Agreement
The state won’t ask you for this document immediately or in case, you are the sole entrepreneur, you don’t need to serious with it. However, for a partnership, you must focus on the preparation this legal document that specifies the operational details of the company. That’s why it’s so important to properly prepare an LLC operating agreement. Voting rights of the members, funding and sharing, profit and loss distribution, company’s governing principles, meeting schedule and procedures, rules to withdraw or rights of a deceased member, company’s dissolution policy etc. are the ingredients of this crucial document.
Step 7. Share The LLC Operating Agreement With All Other Members
For the better and secured future of the company as well as for the smooth running of your business, you should discuss the operational rules and regulations with all the members of the LLC and confirm the agreement. Have their opinion and if appropriate, do the amendment. This should be done before you kick-start your business and register for the LLC.
Step 8. Register To Operate In More Than One State
The best for the start-up company is to try for a local operation based on the type of business and to that effect, you should register your LLC at the same state where your business will operate. However, to expand your business to operate in other states, you need the registration to work in outside states. This is like the same as you had to do during the LLC’s formation, you will have to fill up the form and pay a fee to the state.
Step 9. Check For Help But Prioritize The Self-Service
To be frank this is not always a chronological step to be followed in LLC formation but more like a strong tip to save money and design the dream by the self. You will find many websites and companies offering the service to do the job of forming an LLC for you, but self-service is the best policy if you want to save money. But there are companies that offer affordable services as well. Say for example, getting an EIN number is important for your LLC to get started. In that case, you need to know exactly how to apply EIN online. Relatively easy processing makes it very straightforward and gives you the freedom to do your things in your own way and saves you a lot of money too and you may seek suggestion from a friend or relative who has done this before.
