How to Start an LLC - 5 Steps to Forming a Limited Liability Co

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    Achieve legal separation with the flexible, low-maintenance structure of LLC names. This guide will walk you through the five straightforward steps to creating this business type.

    Specific state requirements vary, but in general, you'll need to choose a name that complies with naming guidelines and does not include words reserved for certain regulated industries (e.g., "bank," "insurance," and "engineering").
    Articles of Organization

    A legal document, the articles of organization is what gives your business its existence as a distinct entity. It outlines essential information about your company such as your name, address and purpose. Most states have a pre-made form you can fill out that makes it easier and faster to get your articles of organization filed.

    The documents can vary by state, but they typically include the following information:

    Your articles of organization will also list whether your LLC is perpetual or indefinite and provide a date when you want your LLC to be dissolved. In most cases, you’ll need to submit your articles of organization along with a filing fee to your secretary of state’s office.

    Make sure that you have a registered agent in place before filing your articles of organization. The registered agent is a person or business that can receive service of process and other legal notices on behalf of your company.
    Registered Agent

    An LLC must have a registered agent, which is an individual or business entity authorized to receive legal notices and service of process on behalf of the LLC. The registered agent must be physically located in the state of New York and be available during normal business hours, 52 weeks a year to accept service of process, summons, subpoenas, and other legal documents. The person or business you designate as your registered agent must also be able to sign a document confirming that they will accept these items on behalf of the LLC.

    You can act as your own registered agent, but that is not a good idea for several reasons. For one, your name and address will be a matter of public record. Another concern is that you may be forced to serve papers on yourself, which could cause a breach of privacy.

    The next step is to get an Employer Identification Number (EIN), which is like a Social Security number for your business. You'll need an EIN if you want to open a bank account for your LLC or hire employees.
    Operating Agreement

    The operating agreement is the legal document that outlines how your LLC will run and the rights and responsibilities of its members. It also details important business procedures like how meetings will be held, voting (usually based on ownership percentages), and what happens when someone leaves or passes away.

    It can include how an LLC will be taxed (as a disregarded entity or as a corporation), which tax form it will file, and its banking information. The document is not required by any state, but it can help your new LLC look more professional and legitimate to outsiders—like investors or workers you might want to hire.

    An LLC operating agreement can be drafted on your own, but it's best to have a lawyer write or review it before signing it. There are free templates online, but these may not contain the specific verbiage you need or leave out important provisions that are relevant to your particular business.

    A major advantage of forming an LLC is that it separates your personal assets, debts and liabilities from those of the business. This means that your personal assets remain protected in case of an unfortunate event like a lawsuit.

    Another benefit is the flexibility in management structure. The owners of an LLC can choose to manage it themselves or to elect managers for the task. This means the business can take on more responsibilities like those of a corporation, but still allows the owners to retain control over daily operations.

    A federal employer identification number, or EIN, is crucial to certain business needs like opening a bank account and hiring employees. Obtaining an EIN is free and easy by completing a form on the IRS website. It is important to note that the name you provide on the EIN form must match the business name as it appears in the articles of organization and the operating agreement.


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