How to Set Up an LLC

Creating a limited-liability company (LLC) is one of the most crucial stages in starting a business. An LLC can provide liability protection for your company as well as other benefits. But, how do you set up an LLC?

While the specific procedures for forming an active LLC vary widely from state to state, here are some broad suggestions about what to expect throughout the procedure. You may also read our guide to the top LLC services for more information on how to get all of your vital paperwork in order.

1. Decide on a Business Name

As you evaluate business names, marketing may be at the forefront of your mind. While it’s critical to pick the proper name for branding objectives, your business name must also comply with state legislation.

State regulations often prohibit you from choosing a business name that is already in use by another company in your state. Most states additionally restrict the use of specific terms that would indicate you’re in the insurance or banking industries. You’ll almost certainly need to add “LLC” or “limited liability company” to the end of your firm name as well.

By visiting the website of the state office responsible for company filings, you may study your state’s LLC naming regulations. This will help you see if the name you choose is accessible. In most states, the Secretary of State is in charge of this.

2. Designate a Registered Agent

LLCs must have a registered agent in every state. A registered agent is someone who receives official or legal papers on behalf of the LLC (such as subpoenas). After receiving these documents, the registered agent will forward them to the LLC’s managing member.

Anyone over the age of 18 can act as a registered agent. You can designate yourself or an employee. However, the agent must be available during normal business hours at a location inside your state. You can also name a corporation that acts as your registered agent. Of course, this will come at a cost; registered agent fees may exceed a hundred dollars every year.

3. Get a Copy of Your State’s LLC Article of Organization Form

You’ll file a paperwork with the state agency that handles company filings in your state to form your LLC as a legal entity. The articles of organization is the name of this document in most jurisdictions. In some state, they may call this something else, such as a certificate of formation. You can fill out a form in each state. Go to the same website you used for company name research to discover your state’s form.

4. Prepare the LLC Article of Organization Forms

Another one of the steps to set up an LLC is preparing some legal documents. For individuals attempting to incorporate an LLC, each state will include its particular criteria and processes. Understanding this process is an imperative step when you need to set up an LLC.

Your business name, address of your major place of business, purpose of the firm, the manner your LLC, contact information for the registered agent, and the term of the LLC are all examples of basic information you’ll need to supply. After that, the form must be signed by one or more business owners or organizers.

Some states, like Nebraska and New York, require you to post a notice in the press stating your intention to form an LLC. Before submitting the articles of incorporation, this step must be complete.

5. File the Articles of Organization

Before filing your articles of incorporation to your state, double-check them. You’ll also have to pay a filing fee. The amount of this fee varies based on the state where your firm is being formed.

When your formation paperwork is accepted, the state will provide you a certificate indicating that your LLC is officially registered. It may also be useful for other important tasks like opening a company bank account and obtaining a tax ID number.

Having an attorney may be very helpful through this process. While you can file for an LCC on your own, it can be a difficult and confusing process.

6. Create an Operating Agreement

The financial, legal, and management rights of all LLC members are detailed in an operating agreement. It can include details such as how revenues will be dispersed, how members will leave the LLC, and who will contribute cash to the company. In essence, it should include all pertinent information about your LLC’s operations.

Although many states do not require an operating agreement, you should nonetheless draft one. LLCs with several members or partners will want to establish one to ensure that everyone understands their rights and duties. Even sole entrepreneurs will benefit from jotting down the specifics.

One alternative, especially for single-member LLCs, is to draft your own operating agreement. There is a plethora of free templates available online to help you through this. Hiring an experienced attorney for more complicated scenarios, such as LLCs with many owners, may be well worth the money.

7. Keep Your LLC Active

The formation of your LLC is merely the first step. You’ll need to keep your business in good standing with your state once it’s been founded. Check your state’s company filing page for the most up-to-date information on how to do so. You may have to produce an annual report and pay an annual filing fee to update information about your LLC.

Steps to Set Up an LLC – Summary

Setting up an LLC can be a confusing process. Because you are creating a legal entity, and working with your state as well as attorneys, you will want to make sure you understand each step along the way.

There are many things to consider when you want to set up an LLC. Follow this guide and it will make it easier.

Legally creating a business entity, such as an LLC, is a very important and exciting step in making your dream business a reality.