Knowing what form to file for LLC is important if you're planning to start a new limited liability company.

How to Form an LLC: Overview

Many people think forming an LLC, or limited liability company, is much more difficult than it really is. In reality, creating a new LLC is a matter of completing a few simple steps:

  • Select a name for your company that is available for use and meets your state's specific naming requirements for an LLC.
  • File the required paperwork in your state.
  • Pay any required filing fees.
  • Draft an operating agreement for your LLC that outlines the rights and responsibilities of the company's members.
  • In certain states, publish a notice of intent to form a new limited liability company.
  • Obtain any licenses or permits required for your company, where applicable.

How to Form an LLC: Choose a Name for Your LLC

Your company's name needs to meet certain rules required by your specific state. In most cases, these requirements are determined by your local secretary of state. Specific requirements may vary from one state to another but, generally speaking, your company's name will need to adhere to the following:

  • Your company's name must be unique and easily distinguishable from the name of any other company currently operating in the state.
  • Your company name should end with a designator, such as "Limited Liability Company," "LLC," or "L.L.C."
  • Your company name should not include certain prohibited works such as "Bank," "Insurance," or "Corporation."

The applicable office, usually the secretary of state, will be able to provide you with information about how to determine whether your intended company name is available for use. In most cases, you'll be able to reserve your company's name for a short time until you are able to file your articles of organization. Keep in mind, however, that there is usually a small fee associated with this service.

Beyond making sure your company's name meets local state requirements, you'll want to make sure it doesn't violate any trademarks of an existing company. It's not typically necessary to register your company's name with the state once you've identified a suitable one for your business. This is typically handled automatically when you file your company's articles of organization.

How to Form an LLC: File Articles of Organization

Once you've decided on a name for your limited liability company, you'll need to file your articles of organization with the appropriate office in your state. Articles of organization are also sometimes referred to as the company's "Certificate of Formation" or "Certificate of Organization." Regardless of the name your state uses to describe this document, it is a requirement when creating a limited liability company in every state.

Some people may consider the fact that you have to pay filing fees when you submit your company's articles of organization to be a disadvantage compared to partnership and sole proprietorship business structures. In most states, however, these fees are relatively low. Filing fees rarely cost more than $100 although some states have additional fees. For example, in the state of California, LLC members are charged an additional $800 for annual taxes in addition to the original filing fee.

The articles of organization for a limited liability company are usually quite simple and don't need to be long. It's usually possible to prepare them by yourself with just a few minutes of effort. You'll simply need to fill in a few blank spaces and check off a few boxes on a template that most states make available for you to use.

Most articles of organization will include the following simple items:

  • The name of your company
  • Your company's address
  • The names of the company's owners or members

In most cases, all the LLC's members will be involved in preparing and signing the company's articles of organization. Alternatively, however, the LLC members may appoint a single person to handle this on their behalf.

You'll also most likely need to include the name and address of your company's designated registered agent. A registered agent is a specific individual who has agreed to participate in legal correspondence on behalf of your LLC and its members, specifically in the event that legal action is taken against the company.

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