How to Form an LLC

It’s really easy to set up a Limited Liability Company (LLC) and it won’t cost you much at all. Read on to find out the key steps you must take if you are ready to start your own LLC.

1. Choose a State

The first step is to choose where you want to set up your LLC. It’s usually easier to start an LLC in the state where you live and plan to do business, but you can also opt to set up an LLC in a different state, to take advantage of business-friendly legislation. Bear in mind also that if you plan on conducting business in multiple states, you will need to register the business in all of them. 

2. Create a Name for Your LLC

Your new LLC needs a name. Pick a name that best suits your business but adhere to the rules of your state. For example, you could make your LLC ‘ Brown Construction LLC’ but you are not allowed to use any names that might imply your company is a government agency, such as ‘FBI Investigations LLC’.

Always check there are no companies with a similar name in your state, as it will make things confusing for your customers. 

If you’re stuck for inspiration, try using a business name generator to see what it comes up with. This one also checks whether the domain name is free, which is handy.

Important: This is a good time to check if your proposed business name is available with a domain name (this may affect your choice). You can check with domain.com.

3. Find a Registered Agent

Registered agents can be people of businesses. Their job is to deal with the legal paperwork on your behalf. They are the recipients of documentation, such as summons and filings, which then they forward on to you. You’ll need to appoint a registered agent in the state where you set up your LLC. 

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4. File Formation Documents with the State 

The next step is to file the Articles of Organization, also known as the Formation Document, with the state. Before you take this step, consider what type of company structure you need. Do you want the company to be managed by members or managers? Both structures have their pros and cons in terms of who makes decisions, so give this a lot of thought. 

5. LLC Operating Agreements

The operating agreement outlines the ownership structure of the LLC. Many states don’t require one, but it makes sense to create one anyway. In simple terms, the operating agreement states when the company was set up, its management structure, where the capital originated from, how profits and losses are distributed, the process for adding and removing members or transferring their shares, and how the LLC can be dissolved. 

6. EINs

Finally, your new LLC will need an EIN, which is an employer identification number. This identifies the LLC for tax purposes and is needed if you want to open a business bank account or hire employees. You can apply for an EIN via the IRS website or by mail, and it’s free. 

There are many other important steps that follow once you have set up an LLC, so make sure you consult a professional advisor.


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