The question "how do I obtain an LLC license?" is one that is asked by individuals who want to set up their business using the LLC structure. An LLC company is one that is operated and owned by individuals who are not personally liable for the company's debts.

Benefits of LLCs

An LLC structure provides tax savings and flexibility to business owners and ensures that their personal assets are untouchable by the company's creditors. A major benefit of setting up an LLC company is the low setup fees and ease of incorporation. Most states allow individuals to set up an LLC online or through the use of standard forms.

An LLC business doesn't pay federal taxes; the business' net income is declared on the personal income tax returns of its members. Although you can set up an LLC by yourself, especially if it only has one member, it's best to seek the advice of a legal professional.

Requirements for LLC Formation

The formation of a new LLC is governed by the laws and regulations of the respective states where the company is to be formed. The following are some of the general requirements for forming an LLC.

Choose a Name

Individuals who want to set up an LLC should conduct a name search through the office of the Secretary of State. The name must end in limited liability company or its abbreviated form, LLC. The name must be completely unique and not contain prohibited words such as incorporated.

It should also not violate a trademark. Once the Secretary of State determines that the name is available, you can reserve the name while you go ahead and complete other necessary paperwork and wait for the operating license.

Filing an Article of Organization

An article of organization contains the following information:

  • The name of the company
  • Business address
  • The purpose of creating the company
  • Names of all the members

The article must be submitted with a filing fee (approximately $200 for most states). Some states also require the article of organization to detail the company's operations, the responsibilities of each member, as well as an operating agreement.

An operating agreement details the basic structure of the company and how the profits will be divided among members. Some states require this agreement to be filed with the Secretary of State.

Choose a Registered Agent

The next step involves selecting a registered agent. A registered agent is a company or an individual that is authorized to receive legal documents and partake in legal proceedings on the company's behalf. All businesses in the U.S. must have a registered agent, else the state may subject the company to a forced dissolution.

Obtain a Relevant Business License

Before commencing operations, most businesses may need to obtain a license from the state. Depending on the type of business and license, regular inspections and filings may be necessary to keep the license in good standing.

Depending on the requirements of your particular state, individuals may need to publish legal notices of their LLCs in newspapers or printed journals. The requirements for publication is different for each state, but usually the legal notice must appear once a week for six months.

Filing Fees

There is a filing fee for registering LLCs and this fee varies from state to state. For instance, Massachusetts charges $520 while Kentucky charges $40. To obtain up-to-date fees for registering an LLC in your state, make an inquiry at the office of the Secretary of State. If you want a certified copy of your company's article of incorporation (for tax purposes), you will have to pay extra.

Check the Availability of Company Name

Before you begin the registration process, you should check with the Secretary of State to ensure that your company name is available. This may also entail an additional fee.

When it comes to registering your business name, you have two options:

  • Register with the Department of State as a service mark for service-oriented businesses
  • Register with the U.S. Patent and Trademark Office as a trademark for businesses that sell products.

Registering your business name either at the federal level or the state level will require the payment of a fee.

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