How to Form an LLC

An LLC, or Limited Liability Company, can be an advantageous way for a business of any type or size to be legally organized. LLC's are unique in that they combine some of the most notable benefits of partnerships (income taxation) and corporations (limited owners' liability) under one umbrella. Here, you'll learn the basics of setting up an LLC for your own budding business.

Choosing Your Company's Name

When you've made the decision to file your business as an LLC, choosing a name is the first step. In most states, it must be totally unique and end with the identifying "Limited Liability Company" (or equivalent) wording. This name will appear on all the documents you file with the state government from here on.

Filing the Articles of Organization

In short, the Articles of Organization for LLC filings are mostly boilerplate and easy to complete. They'll ask brief, answerable questions about the business. Along with these articles, you'll have to designate a "registered agent" for your company. This person, usually one of the owning partners, will be the one that the state contacts in the event of a lawsuit. Of course, you should also be aware of the filing fees accompanied with LLC filings, generally a few hundred dollars in most states.

Getting the Necessary Licenses and Permits

Before your company opens for business, it's important to maintain contact with the state government in order to ensure that you've attained all the necessary licenses and permits needed. All businesses, for example, will need documents such as a tax registration certificate and an FEI (or Federal Employer Identification) number in order to operate legally. Depending on the nature of your business and the state where it's operated, additional permits involving zoning and selling products might also be necessary. Again, it is essential to keep in touch with those in the state government to cover all of your new company's bases.

Creating an Operating Agreement

A large portion of LLC's are formed with multiple "partners", or owners, at the helm. Though most states don't require an operating agreement in order to legally form an LLC, it is always in partners' best interest to do so. Included should be details about how the business will be managed, each member's percentage stake in the company, each member's right to profits and losses, and what will be done in the event of a partner's exit or incapacity.

Keep in touch with the state government to cover all your company's bases