Create an LLC Online: Everything You Need to Know
If you want to create an LLC online, you’ll first want to be familiar with the key features of the LLC.3 min read
Create an LLC Online
If you want to create an LLC online, you’ll first want to be familiar with the key features of the LLC. Also referred to as a Limited Liability Company, the LLC has several unique features that are advantageous for most companies.
An LLC offers a very flexible management structure; therefore, you can choose how to manage your LLC as well as how you wish to be taxed. If, however, you want to offer shares to the public or have investors help expand your capital, then the best choice for you is a corporation.
Keep in mind that the corporation has additional formalities such as requiring you to hire a board of directors, who in turn hire officers to manage the daily affairs of the business. Most corporations are also required to draft corporate bylaws.
But if you determine that the LLC is the best choice for you, you can easily form your LLC online by completing some requirements, such as choosing your business name, finding a registered agent, filing the Articles of Organization, and drafting an Operating Agreement.
Benefits of an LLC
- You are protected from the company’s debts and obligations. This means that you cannot be held personally liable for any legal suits brought against the business.
- You can save money on taxes since the LLC operates as a pass-through entity. This means that the LLC doesn’t pay corporate income taxes. Instead, the profits and losses are passed through to the owners who report it on their personal tax return.
- Registering your business as an LLC can provide additional credibility for potential customers, vendors, suppliers, and even financial institutions.
Setting Up Your LLC
While the requirements for forming an LLC vary by state, there are some similarities in terms of forming an LLC. First and foremost, you will need to choose the state in which you want to register your LLC. Most people either choose to register their LLC in the state in which they live and want to do business.
However, some people choose to form their LLC in business-friendly states, like Delaware and Nevada. If you are going to conduct business in more than one state, then you might need to register in all states where you will be conducting business.
Choose a Name
Next, you’ll have to choose an appropriate business name for your LLC. Every state has certain requirements, one of which is the fact that you must choose a name that is available for use. If the name is already taken by another LLC, you cannot use it. Some other requirements include restrictions against using terms like Bank, Corporation, Trustee, Insurance Company, etc.
Before you choose a name, you should conduct a business entity name search on the Secretary of State’s office in the state in which you plan on registering.
Articles of Organization
Once you’ve chosen a business name, you will need to file the Articles of Organization. When inputting information into this document, you’ll need to include a registered agent’s name and address. Most single-member LLC owners use themselves as the registered agent. However, if you are registering in a state in which you don’t live or have a physical office, then you will need to find a registered agent who lives in that states. Also included in this document is the purpose of your business, as well as a specific description.
After you’ve submitted the Articles of Organization, you should draft an Operating Agreement. While this is not required in most states, it is highly recommended. This agreement includes the following:
- Amount of capital contributions made by all LLC owners
- How profits and losses will be split amongst owners, and how they will report it on their personal tax returns
- How the LLC will be managed, i.e., member or manager-managed
- Voting rights
- Restrictions on ownership transfers
- Procedures for dissolving the LLC
Obtain an Employer Identification Number
You’ll need to obtain an Employer Identification Number (EIN) on the IRS website. You can obtain this ID number for free by simply filing a request with them. If you operate a single-member LLC and have no employees, then you might not need to obtain an LLC. But most banks require an EIN before opening a business bank account for your LLC.
If you need help learning more about creating an LLC online, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.