Creating an LLC

Creating an LLC is a simple process that entails:

  • Choosing a name for your business
  • Registering Your Business with the LLC Office
  • Appointing a Registered Agent
  • Obtaining licenses and Fees

You must create your LLC in the state where intend to conduct business. Further, you must register as a foreign LLC if you wish to conduct business in other states.

Choose a Name

The name of your LLC must comply with the rules of your state's LLC division. When choosing a name, ensure that it confirms to your state’s guidelines. Naming laws vary, but you should not choose the same name as another LLC. Additionally, do not choose names that may confuse your organization with a government agency.

Registered Agent

A registered agent is an appointed official of your LLC who is authorized to receive legal documents on behalf of the company. For instance, an appointed agent can receive any court papers arising from lawsuits. Further, registered agents can either remind members to file annual or reports or file the reports themselves.

File Articles of Organization

An Articles of Organization document refers to the document needed to make your LLC official. It is short and easy-to-digest document, and you can complete it in a matter of minutes. You can get the form from your state’s LLC office. Other states may call it a “certificate of organization” or “certificate of formation.” Once the document is drafted, file it with the LLC office, and pay the filing, which is usually around $100.

Registry Fees

Other states may impose higher fees. For instance, California levies an $800 annual tax in addition to the filing fee. Fees are one disadvantage of creating an LLC when compared to a sole-proprietorship or partnership.

LLC Benefits

If you are thinking of creating an LLC, you should be aware of all of the benefits:

  • Less costly
  • Protects Personal assets of Members
  • Pass-through Taxation (Allowing members to file profits on their personal tax returns)
  • Credibility with the Public
  • Fewer Restrictions
  • Flexible Management Structure

LLC disadvantages

LLC carry certain disadvantages in the form of:

  1. Recurring Expenses
  2. Filing Fee
  3. Transfer Ownership difficulties (The LLC transfer process is harder than the corporate process.)
  4. Less Precedent

Because LLCs are newer when compared to corporations, LLCs do not have enough legal precedent, which could place LLC defendants at a disadvantage when in court. Additionally, LLCs have a lifespan of 30 years.

Create an LLC Operating Agreement

Operating agreements are not mandatory, but they form a crucial role in your business. An operating agreement establishes rules within the organization, as well as management structure and responsibilities of each member. An operating agreement works in the same way as a partnership agreements or corporate bylaw.

Publish an Announcement

Publishing a notice is a requirement in a few states. The publishing law would compel you to post a series of ads in your local newspaper announcing your intention to form a new LLC. You would do this for a few weeks and file a document confirming the publications. The ad requires a simple statement about the LLC, and you would not need to elaborate any further.

Regulatory Permits and Licenses

Once an LLC is official, you need to determine if you need any licensure or permits to operate your business. For instance you may need a business license to conduct business locally. You may also need a federal permit or license, depending on the nature of your business. In addition, you may need such licensure as a:

  • Federal Employer Identification Number (Especially if you intend to hire employees)
  • Tax Registration Certificate
  • Selling Permit
  • Zoning Permit

Check with federal, state or local authorities to confirm if you’ve met the required standards for business operation.

Get a Case Review

Consult an attorney if you are unsure about regulations or the LLC process as a whole. Professional consultation ensures that you are complying with all applicable laws. Lawyers will also guide you throughout the entire LLC process.

Workers’ Compensation

Worker’s Compensation is only necessary if you have workers within your business. You must meet certain federal guidelines when it comes to employee compensation. Check with federal authorities for additional information

If you need help creating an LLC, you can post your legal need on our marketplace. UpCounsel’s team of top lawyers will help you through the creation of the LLC, including the necessary licenses and permits you need. Our lawyers have graduated from Yale and Harvard and have worked with such notable companies as Twilio and Google.