If you plan to form an LLC, there are numerous steps involved. If you have never filed the required paperwork before, it is important to understand this process so that you can ensure success. In some cases, you will require legal assistance. This is particularly important if there are multiple owners and/or stakeholders. If you are wondering about taxes related to an LLC or the required legal forms, here is what you need to know. 

Limited Liability Company (LLC) Overview

LLC stands for a limited liability company, which is similar to a partnership. The main difference is that an LLC benefits from the legal protection of personal assets — much like a corporation. This is why many small businesses choose this business structure while operating as a start-up. Formed based on individual state laws, LLC owners can benefit from limited liability protection. 

As mentioned, only the owners of an LLC are taxed — not the company itself. This is just one of the main benefits of forming an LLC. Other advantages include:

  • Pass-through taxation. This means that both profits and losses are passed on to the company owners. All profits will then be filed on each owner's individual tax returns. 
  • Since profits are only taxed on an individual level and not typically on a business level, LLCs often pay less in taxes. This helps companies avoid what's known as double-taxation.

Although not required, if there will be multiple owners or investors legal counsel is highly recommended. Also, note that the rules when forming an LLC differ from state-to-state. If you have specific questions or concerns regarding your business structure, consult legal counsel. By taking proactive measures from the beginning, you can ensure that your LLC is successful long-term. 

Organizing an LLC

If you plan to form an LLC, please be mindful of the following steps:

  • First, select the state you would like to form an LLC. Delaware is often selected by prospective LLC owners based on its well-developed system of LLC laws. With that being said, the majority of owners should look to form an LLC in the state where they will be doing business. 
  • If you plan to operate as an LLC in multiple states, you may need to register separately with in each state.
  • Select a name for your LLC. Remember, your name will need to end in LLC, it must unique, and the name cannot use the words corporation, Inc, etc. Conduct a business search in order to determine whether or not you proposed name is registered. 
  • Check on the availability of ".com" domains associated with any LLC names you're considering. 
  • Next, file the Articles of Organization. You will need to select a "registered agent" for your LLC as well. The associated fees will depend on the state.
  • Prepare your LLC Operating Agreement. This will outline each owner's financial and management rights — as well as their responsibilities. Since there are multiple variables that you will need to consider, it is recommended that you seek legal counsel for this step. 
  • Consider how you will raise money from investors.
  • Obtain an Employer Identification Number or EIN for short. This may also be referred to as a "Federal Tax Identification Number."
  • Obtain all necessary business licenses. Depending on your business you may need to seek a local, state, and federal license.
  • Set-up an LLC bank account. To plan ahead, know that the bank will likely ask for your filed Articles of Organization and your LLC's EIN.

Legal Forms for LLCs

Please be mindful of the following forms when you plan to operate as an LLC, regardless of where you form and operate. If you have any questions or concerns regarding these forms in relation to your business, it is important to seek legal counsel. All forms should be organized and kept on file so that you can access them when needed. 

  • Meeting Minutes 
  • LLC Operating Agreement 
  • Manager-Managed LLC Operating Agreement 
  • Single-Member LLC Operating Agreement 
  • Multi-Member LLC Operating Agreement 
  • LLC Capital Distribution Contribution 
  • LLC Member Resolution 
  • LLC Manager Resolution 
  • Articles of Amendment 
  • LLC Operating Agreement Amendment 
  • LLC Capital Contribution Bill of Sale 
  • LLC Membership Interest Bill of Sale

If you need help forming 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, Stripe, and Twilio.