1. Choose a Name for Your Business
2. File Your Articles of Organization
3. Create an Operating Agreement
4. Get Necessary Licenses and Permits

Getting your LLC started involves the following steps:

  1. Choose a business name that meets your state's requirements.
  2. File formation paperwork with the state and pay required fees.
  3. Create an operating agreement.
  4. Obtain the necessary licenses and permits.

Optional steps that aren't required in all cases or states include publishing a notice of intent and registering to do business in other states.

Choose a Name for Your Business

Each state has its own requirements for business names, so make sure you adhere to the rules where you register your business.

In most cases, the following apply:

  • Your business name can't be the same as any that are registered in the state.
  • Your company name has to have an LLC designator on the end, such as “Limited Company,” “LLC,” “Limited Liability Company,” or “Ltd. Liability Co.”
  • You can't use restricted words in your LLC name, such as “insurance” or “bank.”

You can find out if your desired business name is available by conducting a business name search at your Secretary of State website. In addition to following state guidelines, you're responsible for making sure your business name doesn't infringe on a trademark.

When you find a business name you can use, you don't usually have to register it. The name will be registered when you file your formation documents.

File Your Articles of Organization

After deciding on a business name, you'll prepare your formation documents to file with the state. In most states, formation documents are called the “Articles of Organization," but some states call them a “Certificate of Organization” or “Certificate of Formation."

You'll fill in basic information, such as the name and address of your business as well as the owners' names. You'll pay a filing fee when you submit your paperwork, and fees vary from state to state, but it's generally inexpensive. Some states require all owners of the LLC to sign the Articles, but others accept the signature of one appointed person.

You'll also list the name and address of your LLC's registered agent, also called an agent for service of process or resident agent. A registered agent is a person or company who agrees to accept legal paperwork and documents on behalf of your company.

Create an Operating Agreement

It's important to create an operating agreement, although most states don't require you to have one or file it with your formation paperwork. However, an operating agreement establishes rules for ownership of your company as well as daily operations. It clearly details each owner's role in the company.

An operating agreement is similar to partnership agreements or corporate bylaws. It gives you a guideline for handling conflicts and transferring ownership. You can make your agreement as detailed as you like. It will be necessary if any disagreements arise between members over management or ownership issues.

Typically, an operating agreement covers the following:

  • Each owner's percentage of ownership
  • Each owner's rights and responsibilities
  • The allocation of profits and losses
  • How the company will be managed
  • Voting power for each member
  • Meeting and voting rules
  • “Buy-sell” provisions, outlining the steps to take if an owner wants to sell his or her interest in the company, becomes disabled, or passes away

Get Necessary Licenses and Permits

Once the state approves your paperwork, your LLC is officially created.

Before you open for business, you must obtain all permits and licenses required in your area and for your business. Different industries sometimes have different requirements, so check what's necessary for your particular company.

You may need some or all of the following:

Depending on which state in which you form your company, you may be required to publish a notice in a local newspaper stating your intention of starting an LLC. You may have to publish it more than once. If you want to do business in other states, you must register in those states as well. Be aware of different rules and requirements so that you take all necessary legal steps.

Starting an LLC is much easier than starting other business types, such as corporations and partnerships. You can always consult with tax and legal professionals for help with the process.

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