Step by Step Guide on How to Create a Limited Liability Company

If you are in the process of starting your own business, then chances are you have considered forming a Limited Liability Company (LLC). Over the years, it has risen to become one of the most popular legal structure for a startup business. Forming an LLC is a simple process and may take an hour or less depending on the structure of your organization.

Why establish an LLC?

Typically, an LLC is preferred as it provides the limited liability protection of one corporation. However, it is flexible as there are no formalities, paperwork, or fees. LLCs allow for a pass-through taxation. This said, only the owner is taxed. So what are the different steps to form an LLC?

  1. Choose the State and the Name of the LLC.

Different states have different rules and regulations. It’s important to choose where you will set up your business. However, for convenience and to avoid high fees, it’s always best to choose the state where your business is located.

You should then choose a name for your business. One requirement by all states is that the name of the LLC can’t be similar to another business entity’s name already filed at the LLC office. Names also have to end with an LLC designator like “Limited Company”, “LLC” etc.

  1. File the LLC Articles of Organization.

The Articles of Organization is a simple form which requires you to fill out information about your planned LLC. It will ask about the name of the LLC, its members, its business purpose, and contact information. In order to file an Article of Organization, you need to pay a filing fee, which typically ranges from $30 to $200.

You can check the Secretary of State’s website to find the rules and fees involved in filing the LLC Articles of Organization.

  1. Prepare the LLC Operating Agreement.

The LLC Operating Agreement is an internal document that describes how the LLC will be run. It spells out important details such as the contributions and responsibilities of the members, management of the business, and how the profit will be shared.

  1. Publish a Notice.

In some states, you’ll have to print a newspaper notice once you’re sure about your intention to build an LLC. The notice should be published a couple of times in the first few weeks before submitting your affidavit to the LLC filing office.

  1. Obtain Necessary Licenses and Permits.

To complete the registration of the business, you are required to obtain the necessary business licenses for your business to operate. If you are going to have employees, then you’ll also have to obtain an Employee Identification Number (EIN) from the IRS Website.

Final Thoughts

Given how simple it is to form an LLC company, there is no reason why you shouldn’t make your business one. With an LLC, you won’t risk personal liability for the debts or failures of your business. Just follow the steps given above.