How to register an LLC is something that entrepreneurs who wish to elect limited liability company (LLC) status for their businesses have to know. An LLC refers to a hybrid business entity that protects its owners from being personally liable for its financial obligations, while enabling them to pay taxes at the individual level. The process of registering an LLC may vary from state to state, but it is generally easy and inexpensive.

How to Form an LLC

Name Your LLC

If you decide to organize your business as an LLC, the first thing you need to do is select a business name. The name you choose must meet the following requirements:

  • Typically must end with “Limited Liability Company,” “LLC,” or another variant.
  • Must not be the same as another LLC that is registered with the Secretary of State.
  • Must not contain certain words that are not permitted by state law, such as “insurance,” “bank,” or “trustee.”
  • Must not contain terms or abbreviations that suggest that the company may be a corporation, such as “corporation,” “incorporated,” “corp.,” or “inc.”
  • Must not violate someone else's trademark.

File the Articles of Organization

Filing the Articles of Organization with the Secretary of State will make the formation of your LLC official. The Articles of Organization is typically easy to complete and usually involves the following steps:

  • Appointing a registered agent for your LLC
  • Stating the purpose of your LLC
  • Indicating whether your LLC will be member-managed or manager-managed
  • Paying a filing fee

Create an Operating Agreement

An operating agreement refers to a document that outlines the management and financial responsibilities of the members of your LLC. It should include information such as:

  • Amount of capital contributions from each member of your LLC
  • Remedies and penalties for capital contributions that are not made
  • Method by which profits are divided and distributed to the owners
  • Members' preferences with regards to profit distribution and liquidation methods
  • Indication of whether your LLC will be managed by members or managers
  • Number of officers to be appointed
  • Voting right of members in important events such as the addition of capital contributions or the sale of the company
  • Managers' indemnification protection
  • Restrictions that apply to the transfer of interests
  • Procedures for member meetings
  • Dissolution procedures

Apply for an Employer Identification Number (EIN)

If you are hiring employees for your LLC, you must get an EIN from the Internal Revenue Service (IRS). Now, there is an online service at the IRS website that enables you to instantly obtain an EIN for free. An EIN is required to open a business account in most banks.

Get the Required Business Licenses

Depending on what kind of business you are operating, you may have to get a federal, state, or local business license. Examples of businesses that require business licenses are those that sell alcohol or firearms. Some cities make it mandatory for every business to obtain a business license, while others require special licenses for certain types of businesses, such as restaurants, retailers, entertainment venues, day care centers, auto repair shops, and manufacturing facilities.

Open a Business Bank Account

Opening a business bank account for your LLC can help you properly capitalize on your business by maintaining sufficient funds for its operations and keeping your business finances separate from your personal finances. A bank will typically require you to provide the following documents and information:

  • Articles of Organization
  • EIN
  • Resolutions to authorize the opening of the new account
  • Designation of signing authority

Meet Annual Filing Requirements

Most states require an LLC to file annual reports. Failure to file these reports on time can result in late fees and penalties, or even suspension or dissolution or your LLC. If your business name, address, or other information in your LLC filings has changed, make sure the appropriate amendments are made to your filings.

Publish an LLC Formation Notice

In some states, you are required to publish a notice in a local newspaper to announce the formation of your LLC. You must publish the notice a certain number of times over several weeks. Upon completing this requirement, you will obtain an “affidavit of publication,” which must be submitted to the LLC filing office.

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