Step-by-step guide to help you form an LLC

Starting an LLC in any state is so easy, it can be achieved by following these six-steps.

Step One – Select the state

The obvious choice is to form the LLC within the state where the business will conduct business. There is an exception when a business plans to operate in different states as well, then the business will need to register for a foreign LLC in every state where they plan to do business.

Some businesses also opt to form their LLC in a state that has more business-friendly laws, like Delaware or Nevada. Businesses need to be mindful that this could incur unnecessary costs and paperwork.

Step Two – Name the LLC

This step is regarded as part of the first step of the formation of an LLC process. The rules for what kind of names are allowed vary from state-to-state. However, generally, the following guidelines are observed:

  • The name can either incorporate the abbreviations (LLC or L.L.C.) or it needs to incorporate the phrase “limited liability company”
  • Under no circumstances can the name consist of words that could confuse the LLC with a government agency (FBI, Treasury, State Department, etc.).
  • Additional paperwork may be required as well as a licensed individual, such as a doctor or lawyer, to be part of your LLC when utilizing regulated words (e.g. Bank, Attorney, University).

The naming of a business can be broken down into a three-step phase: deciding on the best brand name for the business, following the naming rules for the business structure, and finally, check if the business name is available. Some business owners might find this task rather daunting, in such instances consider using the Business Name Generator.

Step Three – Choose a Registered agent

Firstly, what is a registered agent?

“A registered agent is an individual or business entity that accepts tax and legal documents on behalf of your business. A registered agent is also known as a resident agent or statutory agent”.

The documents that are being referred to include official correspondence; legal summons and document filings, the registered agent will be responsible for receiving the documents and forwarding the documents to the owner(s).

It is a requirement from most states that every LLC nominate a registered agent. This chosen registered agent needs to also reside within the state where the business is conducted.

Most states require every LLC to nominate a registered agent. Your registered agent must be a resident of the state you’re doing business in, or a corporation authorized to conduct business in that state. Utilizing the services of a professional registered agent can be beneficial, as it grants peace of mind, privacy and gives the business owner to focus their attention on the business instead.

Step Four – File the LLC with the state

To make the process formation, the business will need to file the documents with the state where the business will be conducted. This document is referred to as the Articles of Organization, and in some states, it is also known as the Certificate of Formation or the Certificate of Organization. Filing the Articles of Organization is a simple three-step process; find the State’s Articles of Organization online, fill out the forms for the Articles of Organization and finally, file the Articles of Organization.

Before concluding the filing process it is also wise to start considering how the LLC will be managed, either member-managed or manager-managed. Member-managed is applicable for when an LLC is relatively small, therefore the members are able and willing to be involved in the operations of the business. Member-managed is applicable for the LLC is a bit larger and their members are not interested in being part of the operations of the business.

Step Five – Create an LLC Operating Agreement

Firstly, what is an LLC Operating Agreement? It is a legal document that outlines the ownership structure and member roles of a new LLC. Despite that most states do not require

Although most states do not officially require a business to have an Operating Agreement, it is still advisable that the business has one. The Operating Agreement comprises of six main sections; Organization, management and voting, capital contributions, distributions, membership changes and finally dissolution

Step Six – Get an EIN

Employer Identification Number (EIN) is similar to a social security number, but for an LLC. This is needed if the business plans to hire employees or make use of a business bank account.

So, go ahead and start the process here.