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How to Create An LLC
So, you’ve got a killer business idea, and you want to turn it into a profitable venture. Congratulations!
The first step you need to take is to establish your business as a proper entity in the eyes of the IRS. And one of the best ways to do that is to register your business as a Limited Liability Company (LLC).
However, there are some factors you should consider when setting up an LLC properly so that you don’t run afoul of any IRS regulations that might delay or disrupt your business operations.
Additionally, the exact requirements for LLC registration may differ depending on the state you’re in. Here’s all you need to create your LLC, and kickstart your business on your journey to success.
Step-by-Step Guide to Creating an LLC:
You may have a great business idea, but what about its name? In many ways, naming a business is an important first step; you need to consider the marketability and branding potential of your business name.
Generally, if you come up with a business name that has already been taken in your state, you won’t be able to use that business or likeness. You’ll also need to include an “LLC”, “LC”, “Limited Company”, or “Limited Liability Company” at the end of your business name.
Every LLC requires a registered agent, who receives any legal or official government documents on behalf of the LLC. This includes subpoenas.
Generally, anyone over 18 can become a registered agent, and it can be yourself (business owner) or an employee of the business. The basic requirement is that the registered agent must be available at the registered address in the state the business is registered in during normal business hours.
Otherwise, you can find the services of a company that provides registered agent services – at a fee of around a hundred dollars or more per year.
3. Obtain and Prepare LLC’s Article of Organization in your State
To turn your LLC into a legal entity, you have to file an Article of Organization Form with your state agency – these are the people that handle business filings in your state.
The name of the form itself may vary from state to state, however, you’ll be able to find the right one if you enquire with your state agency.
Once you’ve got your Article of Organization form, it’s time to fill it up and file it. You’ll need to fill up information such as:
– Business name
– Address of your principal place of business
– Purpose of your business
– Your LLC managerial structure
– Contact info for your registered agent
– Duration of your LLC
After you complete the form, one or more business owners must sign the form to make it a legally binding document.
If you’re setting up your LLC in some states like New York or Nebraska, you’ll be required to publish your desire to register your LLC in the local newspaper. Check with your state to see if this rule applies to you. If it does, you must complete this step before you can file your Article of Organization.
You’ll need to pay a filing fee, which varies from state to state. After your documents are all approved, you’ll receive a certificate to indicate that your LLC is formally registered.
You can use this certificate to set up a business bank account, or to get an IRS tax ID number for your business.
The Operating Agreement clearly lays out the operational, legal, managerial, and financial details of all the members involved in the LLC in relation to the company.
It shows distribution of profits, details of how members leave the LLC, and capital contribution to the business.
For multiple member LLCs, this step is important and beneficial as it lays out the foundations, responsibilities, and rights of every member that everyone must agree to before the business starts operating.
6. Ensure your LLC annual report is filed yearly
After you’ve done all the above steps, you’ll want to ensure that your LLC remains in good standing with the state. This means you have to keep your LLC active by filing an annual report that includes all the most updated information relating to your LLC. You’ll have to pay an annual filing fee for this, so consider this important step when you plan your yearly business budget.
