There are many small business owners who take a decision of setting up a Limited Liability Company (LLC) for the liability protection that it receives. If you don’t know the legal status of an LLC, you should be aware that an LLC exists separately from the owners and henceforth the owners aren’t liable personally for any kind of commercial debts. It is easier and simpler to set up LLCs and they’re more flexible than corporations. You don’t even need to keep reporting often with LLCs.
In order to form an LLC, you will require filing all paperwork within the state where you want your business to be located. All states will have different processes and rules and there are many steps that you will need to follow to get the LLC running, irrespective of where you live. Let’s take a look at the steps.
Select a name for your LLC
The name of your business can never be similar to another LLC which is on file within your LLC office of your state. The name of your LLC should end with some LLC designator like Limited Company or Limited Liability Company or it could even end with the abbreviations like LLC or L.L.C. The LLC office of your state will check whether or not the name of the company is a replica of another business. You can even check Incfile Reviews to know more on setting up an LLC.
‘Articles of Organization’ need to be prepared and filed
The next step that you have to take is to prepare ‘articles of organization’ and file it with the state’s LLC office for filing. Ideally, you should offer only the name of the LLC, the address and the names of the members and owners. There are some states like Mississippi, Delaware, New Jersey, New Hampshire and Washington which utilize the term ‘certificate of formation’ instead. Check all these details before filing the articles of organization.
An LLC operating agreement has to be created
The LLC operating agreement comprises of the rules for operation and ownership of the business. This is pretty similar to corporate bylaws and partnership agreement. Ideally, an operating agreement will deal with the interests of the members in the business, the responsibilities and rights of the members, voting information and profits and losses of the management.
Get permits and licenses for your business
Before you start doing a business, you have to get the permit and license which anyone would need while starting off with a new business. Among the permits and licenses, you would require getting a business license and in case your LLC sells products, then you would also need a seller’s permit.
Finally, if you wish to retain the status of separate entity of your LLC, you also need to follow few specific formalities like maintaining detailed fiscal records and keeping a record of the biggest decisions. Follow the steps given above to form an LLC with ease.