The thought of ‘being your own boss’ is surely exciting. What can be a better way to do the same than by setting up a business? Now that one has decided to set up a business, the next crucial step is to determine the right business structure. Many factors like regulations, tax treatment, personal liability, and more are governed by different business forms. One of the easiest and most efficient ways to commence a business is setting up an LLC (Limited Liability Company). Let’s explore this detailed guide to learn the basic steps to form an LLC.
1. Determine the business name:
The first and foremost step that is to be undertaken to set up an LLC is to figure out the name of the business. Not only the name of the company must be appropriate for the branding purpose, but also it must meet the requirements of state law. Usually, state laws don’t allow choosing the business name already being used by another company, and also it is mandatory to use ‘LLC’ at the end of the chosen business name.
2. Designate a registered agent:
Avery state requires an LLC to designate a registered agent who will be responsible for receiving official and legal documents on the behalf of the company. A registered agent can be an individual having minimum age of 18 years or a company providing registered agent services.
3. Prepare and file the LLC Article of Organization Form:
To form an LLC as a legal entity, it is essential to file articles of organization with the state agency handling business filings in the state where the LLC is organized. Basic information that is to be provided in the document consists of the business name, address, purpose, duration, and contact information of the registered agent. The document must be signed by one or two business owners. Once completed, the document is to be submitted to the state, and also filing fee is to be paid. After approval of the formation documents, a certificate stating the official registration of LLC is issued by the state.
4. Create an Operating agreement:
Although creating an operating agreement is not mandated by the state, having one ensures that everyone in the company agrees on their rights and responsibilities. An operating agreement is a document in which the details of the financial, management and legal rights of all members or owners of an LLC are stated.
5. Keep the LLC Active:
Setting up a Limited Liability Company (LLC) is just the starting. Once it is commenced, the owners are required to make sure that the company remains in good standing with the particular state. Refer to the state’s filling website time and again to know about the current information.
Almost everyone wants to be their own boss and thus, looks forward to setting up a business. Once decided to form an LLC, consider going through this guide to know the information about the basic steps to establish an LLC in any state.