Establish LLC: Everything You Need to Know
You may want to establish an LLC for your business for several reasons, such as protecting your personal assets from your business's creditors.3 min read
You may want to establish an LLC for your business for several reasons. If you want to protect your personal assets from your business's creditors, avoid the complexity of a corporate structure, or pass-through your profits and losses to LLC members, then an LLC might be the right structure for you.
To establish an LLC:
- Obtain a copy of your state's LLC form.
- Choose a business name.
- If required, publish a notice of intent in your local newspaper.
- Submit your Articles of Organization form.
- Acquire the licenses and permits you need to open a business in your state and/or county.
- Create an operating agreement for your LLC.
Steps to Setting Up a Limited Liability Company (LLC)
An LLC has characteristics of a partnership and corporation. It has the filing simplicity of a partnership and the legal protection of a corporation. Though requirements vary from state to state, it usually takes an hour or less to create a simple LLC. Your secretary of state's website will have information regarding the filing requirements and fees.
Obtain a Copy of Your State's LLC Articles of Organization Form
The LLC Articles of Organization form (also called the certificate of formation or certificate of organization is available on your secretary of state's website and in their office. Ask your secretary of state's office what other guidelines you will have to follow. Here are some suggested questions:
- What are the guidelines for naming my business?
- Do I need to file a notice of intent to let the public know I am establishing an LLC? If so, what is the procedure?
- What types of fees or taxes do I need to pay to establish an LLC? How much are they, and how often do I pay them?
Choose a Name for Your Business
When setting up an LLC, choose a business name that follows your state's rules. Aside from certain reserve words, you have flexibility with creating your core name. There are words that your state may not allow you to use, like Corporation, Incorporated, Insurance, City, and others. Your legal name must end with an LLC designator, such as Limited Liability Company, LLC, etc. Furthermore, you cannot use a name that someone has already registered with the state.
Along with state's LLC naming rules, make sure your business name doesn't violate another company's trademark. Once you've found a legal and available name, you don't usually need to register it with your state. When you file your articles of organization, the state will automatically register your business name.
Filling Out the LLC Articles of Organization Form
The Articles of Organization form is straightforward and simple. You provide your business name, why you are in business, and your primary office. You also must provide a name and contact information for your registered agent. This is usually you or one of your founding members, though it does not have to be. Make sure your LLC's registered agent is available during normal office hours to receive legal notices on the company's behalf.
Publish a Notice in Your Local Newspaper
If you are required to publish a notice of intent in the local newspaper, you must do it prior to filing your Articles of Organization. You must publish it multiple times over a defined number of weeks. Once you have met the requirements, submit an affidavit of publication (also called a certificate of publication) to the LLC filing office. If you need assistance, ask your local newspaper for help.
Submit Your Articles of Organization Form
Register your LLC by submitting the Articles of Organization, along with the filing fee and any other required artifacts to your secretary of state's office. The fees, depending on your state, range from $40 to $900. Some states, like California, require you to pay taxes.
Get Licenses and Permits
You will need to get the necessary licenses and permits, such as a business license, EIN, zoning permit, etc., before you open for business.
Starting an LLC is straightforward and less complicated than setting up a standard corporation. Though it is not as economical as setting up a sole proprietorship or a partnership, the limited liability benefits may outweigh the costs to form it.
If you need help with establishing an LLC, 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.