How to Get LLC for Business: Everything You Need to Know
How to get LLC for business involves reserving the LLC's name, appointing a registered agent for service process, and filing the Articles of Organization.3 min read
How to get LLC for business involves reserving the LLC's name, appointing a registered agent for service process, and filing the Articles of Organization. The LLC business should also make an operating agreement, get an Employer Identification Number, get a business bank account, and get permits and licenses.
Characteristics of LLC Businesses
LLC businesses are treated as pass-through entities for federal tax purposes. LLCs avoid double taxation by the IRS. All the profits LLCs earned are forwarded to the shareholders. It is the shareholders who pay personal income tax on their share of the business earnings. LLCs can have one or more owners and all the members of LLCs have limited liability protection if they manage the business professionally and separate personal finances from those of the business. In that case, the personal assets of LLC owners cannot be confiscated to cover debts of the LLC.
Legal Requirements for LLC Business Registration
Getting an LLC business up and running is a process that involves a number of steps. The process differs slightly in the different states.Typical steps you might need to take to form your LLC are:
Your journey toward forming your LLC business begins with name reservation in most states. The name is normally reserved by submitting a form to the office of the Secretary of State and paying a fee. LLC names are required to comply with a number of requirements that vary from state to state but usually include the following:
- The name must be distinguishable from names of other businesses in the state.
- The name must have a phrase which shows that the business is a Limited Liability Company. Typical phrases some states insist on include "L.L.C," "Company,"“LLC,” “and "Limited Liability Company.”
In some states, you can check the availability of a name by searching the online database of the division of corporations of the Secretary of State.
Appointing a Registered Agent for Service Process
The registered agent is responsible for receiving legal papers and notices and forwarding them to the LLC. While in some states an LLC can serve as its own agent, this is prohibited in other states and LLCs must appoint an independent person or entity for this purpose.
Filing the Articles of Organization
The Articles of Organization is submitted to the state's Secretary of State in most states and it serves as the formal registration document for the LLC. This document will give a number of details about your LLC:
- The name and address of your LLC
- The name and address of the LLC's registered agent
- The names of the LLC's members and managers
- The addresses of the LLC's members and managers
- Information on the management of the LLC
Publishing the Articles of Organization
A few states require newly-formed LLCs to publish their Articles of Organization. After publishing the document, the owners might be required to file an affidavit of publication to the Secretary of State.
Other Things You Might Need to Do Before Your LLC Starts Operating
Making an Operating Agreement
An operating agreement serves as the constitution of the LLC and it will guide the running of the LLC. This document is not a legal requirement in most states but is needed to avoid unnecessary conflicts between the owners.
Getting an Employer Identification Number
An LLC will need an Employer Identification Number (EIN) if it has employees or multiple members. The EIN will help the LLC when communicating with tax authorities, lenders, and investors.
Opening a Business Bank Account
An LLC should be managed professionally in order for members to maintain their limited liability protection. The finances of the LLC must be separated from those of the individual members. A business bank account needs to be opened to ensure this separation is maintained.
Getting Business Licenses and Permits
Most businesses need to have business licenses and permits to operate legally. There is no “one-permit-fits-all” approach because the type and number of permits your business needs depend on where you do business and your line of business. You can get more information about permits from the local chamber of commerce and the Secretary of State for your state.
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