An LLC (Limited Liability Company) is usually the first choice of business type for many small business people because it provides protection from liability. Under business law, an LLC is considered a separate entity from the owner. Therefore, the owners of the business are not considered or held responsible for debts of the business. It is much easier to set up an LLC as compared to setting up a corporation because of the few reporting requirements.
Starting An LLC
You need to file all the required papers with the state of the location of your business. State regulations and procedures regarding the establishment of an LLC differ from one to the other. However, the basic steps of starting an LLC matter a lot and are basically the same regardless of the state where you intend to establish a business.
Select The Name Of Your LLC
You will start with the search of a unique business name online. It is important to make sure the name you want is available in your state before you can file your paperwork. One of the reasons why you should only register a unique business name is to avoid trademark infringement charges. A unique business name also helps you to avoid issues when you are branding your business.
In many states, you will find that no two businesses can use the same name or a distinctly related business name. This also means same name but one ending with Inc. and another one with LLC even if the two businesses are located in two different cities. You will also find that many states have regulations that restrict the use of terms like bank, and other similar ones in their business names.
Reserve The Name
You may pay a small name reservation fee if you find a unique LLC name that has not been taken and you do not want to use it right away. However, note that this is optional as you may also choose to not reserve the name and hope that no one else registers it until you are ready to go to business. All states allow you to reserve a business name. You just have to fill a certain form, pay the fees and you will be good to go. The fees that you shall pay depend on the regulations in your state.
Naming A Registered Agent
A registered agent is also referred to as a statutory agent and this is the person who agrees to the responsibility of receiving subpoenas, lawsuits, official documents and others on behalf of the LLC so that he/she can pass these along to the person in charge of the LLC. Ensure the person that you are considering to choose as your registered agent is over 18 years of age. You can also pick one of the members of the LLC as a registered agent.
Get The LLC Operating Agreement Ready
This agreement is like a plan that is going to illustrate how the LLC is going to be run and it lays down things like the voting rights of the members, ownership, how the profits will be shared and how the losses will be shared too. It also details how the meetings will be carried out, what happens if a member dies, how the business is going to be dissolved should it need to close down and the rights of all members. Please note that the operating agreement is not a requirement of the state, but it is good for the owners of the business to decide the future of their business together and put it down on paper.
Filing Papers With The State
You will be required to file articles of organization with the state. This is a basic requirement across all states. It contains details like name and address of the LLC, length of the existence of the business, address/names of the registered agent and why the LLC was established. These days, LLC online filing is possible as there are pro service providers for new businesses. You can even get help with your business tax ID number application as well.
As the person who is forming the LLC, you must sign these papers. In some states too, the registered agent might be needed to sign and you will be required to pay a filing fee. Depending on your state, you may have to file the papers with the secretary of state or maybe a different department that handles such filings.
Get The Certificate From State
This is the certificate that will be issued by the state after filing the papers. It is proof that your LLC now officially exists and after you get it, you can go ahead to get the needed business permits, tax ID and even a business account.
Registering To Do Business In Different States
To do business in different states with the same LLC, you will be needed to file the same paperwork, and you will have to appoint a registered agent in every state where you will be doing business. This is optional however
