LLC Paperwork: Everything You Need to Know
LLC paperwork is the documentation that needs to be completed and filed for an individual to start a limited liability company (LLC).4 min read
2. How Do You Form a Limited Liability Company?
3. What Are the Steps to Form an LLC?
4. How Is an LLC Taxed?
Updated November 16, 2020:
LLC paperwork is the documentation that needs to be completed and filed for an individual to start a limited liability company (LLC).
What Is a Limited Liability Company?
An LLC is a business that is a cross between a corporation and a partnership. The business basically retains many of the advantages of both of these types of businesses. The LLC is formed under the laws of the state where the business operates and it is registered and typically the Secretary of State is the individual who allows for the registration of the LLC.
This LLC must register with the IRS and it also must obtain permits and licenses that allow the business to run legally as an entity in the state.
How Do You Form a Limited Liability Company?
Forming an LLC is actually a lot easier than some individuals think it is. There are some basic steps that must be taken to create a legal LLC entity. These steps start with choosing a business name, locating an individual who can become a registered agent, filing articles of corporation papers, providing fees, giving information on the business and members, and filling out forms to get the needed licenses to actually run the business.
What Are the Steps to Form an LLC?
Follow this procedure to create a new LLC.
- Choose a name for your LLC that complies with the rules and laws in your state. One of the simpler rules is to make sure that the LLC name differs from other limited liability companies that are already registered and on file with the state.
- Assign a registered agent who has legal authority when it comes to receiving, filing, and executing tax and legal documents on behalf of your business. These are the papers that your LLC specifically receives through a processor. Agents do not need to be business owners. However, they will need to live in the state where you are starting your LLC and they should have an office in the state as well. If you do not want to appoint an individual, there are services available that you can invest in.
- File Articles of Organization. This is a document that outlines all the information of your LLC. Some states call the papers a certificate of organization or a certificate of formation. The document is relatively short and simple. However, it is incredibly important when it comes to starting your LLC. The paperwork needs to be prepared and then filed with the Secretary of State filing office. The articles of organization paperwork can typically be found online and filled out in a few minutes by adding information into the provided blanks. However, before you fill out the documents, you should look at the requirements in your state for forming the LLC. This information can be found on your state government's website as well. When you are ready to fill out the documents, fill in the LLC name, the names of members, the registered agent, the address, and the financial contributions of all the members.
- Submit filing fees, which vary by state. In most states, it's around $100, but some states charge more. For example, the LLC filing fee in California is $800.
- Create an LLC operating agreement. When you file your original paperwork, you should think about also drafting an operating agreement. This is something that is not required, but it outlines the rules of the business according to your own vision. It also states how you want the business to operate in terms of members and their responsibilities. While the document is not essential for starting your LLC, it is helpful to organize your vision for your entity in one place.
- Obtain business licenses and permits as required by your location and industry. Common documents you may need include a federal employer ID number, a zoning permit, a seller's permit, and a tax registration certificate. The more heavily your industry is regulated at the local, state, and federal levels, the more likely it is that you will need additional permits and licenses to legally operate.
In addition to these basic steps, a few states require you to publish a notice of your LLC formation in local newspapers as designated by the Secretary of State. This must be done before you file the articles of organization.
Keep in mind that if you plan to do business in a state other than where your LLC was formed, you'll need to register in that state as a foreign entity and obtain the necessary licenses and permits.
How Is an LLC Taxed?
Depending on how the LLC chooses to be treated for tax purposes, either the LLC owners (known as members) or the LLC itself will be taxed at the federal, state, and local levels. You may need to complete a separate registration in your state for employment, income, and sales taxes. You might be required by the state to pay for temporary disability insurance for your employees. Even if your LLC does not have employees, you will likely need to apply for an IRS employer identification number (EIN).
Your LLC will be taxed as a sole proprietor if you are the only member and as a partnership if you have between 2 and 100 members. However, you can fill out IRS Form 8832 to opt for corporate taxation.
- File Form 1065 if your LLC is treated as a partnership. This indicates that profits and losses will be "passed through" to the members and reported on their individual income tax returns.
- If your LLC did business with another company totaling more than $600, you'll receive an IRS Form 1099 for that business which you will need to submit with your tax return.
- If you need more time to submit your tax return, you can request a five-month extension using IRS Form 7004.
If you need assistance with developing an LLC, then make sure to post a job on the UpCounsel marketplace. We offer legal assistance through the expertise of our vast pool of legal professionals. We accept only the best, meaning you will be served by the top 5 percent of the lawyers in the country who have worked with businesses like Google, Menlo Ventures, and Airbnb.