How to Start an LLC

What to Know Before Forming an LLC

You might be aware of the benefits you can get from operating a business as a (LLC) Limited Liability Company. It is a Limited liability protection and a simple approach of paying taxes as compared to the one required for corporations. This article concentrates on the process you need to take to make the LLC a legal reality. Significantly you must:

·       Select the available business name which meets the terms with the state’s LLC laws.

·       File documents, generally called articles of organization, and pay the filing fee.

·       Make an LLC working contract that creates the rights and responsibilities of the Limited Liability Company members.

·       Issue a notice of your intention to create an LLC

·       Get permits and licenses which may be needed for the business.

Selecting the Name for your LLC

The name of the LLC should comply with the LLC division state’s rules. It is an office which the Corporation division and the Department or Secretary of State’s office are combined. Generally, the requirements vary from state to state:

·       The name should not be the same with another LLC presently operating

·       The name should end with an LLC designator like Limited Liability Company or Limited Company or the abbreviation of one of the following phrases L.L.C., LLC or Ltd. Liability Co.

·       The name should not include some words not allowed by the state, like insurance, city, bank or a corporation. Normally states differ in prohibited terms.

The state’s LLC office will inform you how to check if the proposed name is available for use. Most of the time you can make a reservation of your LLC name for a limited period of time by paying a small amount. The reservation can be for a limited time frame until you file the articles of organization. Aside from following the naming rules in your LLC state, you need to ensure that your name will not violate any company’s trademark. As soon as you found a lawful and available name, there is no need for you to register it with your state. The business name will be registered automatically once you file your articles of organization.

Filing the Articles of Organization

Once you are done with the name of your business, you should organize and file the Articles of Organization with the state’s LLC filing office. As most states employ the Articles of Organization which pertain to the basic document developing an LLC, other states such as Mississippi, Washington, Delaware, New Jersey and New Hampshire employ the term “Certification of Formation.” Pennsylvania and Massachusetts term the document a Certificate of Organization. The primary disadvantage of developing an LLC instead of a single proprietorship or partnership is that you will have to pay a certain amount upon filing of your articles of organization.

 Developing an LLC Operating Contract

Although operating contracts need to be filed at the LLC filing office and are seldom required by state law, it is important that you make one. The LLC operating contract includes the rules for the operation and the ownership of the company.

Notice of Intention

If you are creating an LLC in New York or Arizona, you should take an additional step in order for your company to become official. You should publish in the local newspaper a notice informing that you plan to form an LLC. It is a must that you publish a notice many times for about a week and then forward an affidavit of publication to the filing office.

Permits and Licenses

Upon completion of the above steps, your LLC becomes official. However, before you can start operating your business, you need to get the permits and licenses that are normally needed if you have a new business. It may include a business license, a seller’s permit, zoning permit or a federal employer identification number. 

It is highly advised that with every LLC you have an operating agreement. This is the only legal document that states that you in fact own, or members own your LLC.