An LLC or a limited liability company is a hybrid business structure that focuses more on protecting yourself if your business goes bankrupt. It’s more straightforward than the typical sole-proprietorship or corporation, which has tons of administrative hassle and paperwork. Not only that, but an LLC combines can combine the limited liability of a corporation while giving you the flexibility and lack of formality that sole-proprietorship and a partnership has. So if you want to limit yourself from potential lawsuits or bankruptcy, then you will want to form an LLC.
There are many trustworthy LLC formation services today, and one of them is LegalZoom which you can check out at https://llcguys.com/reviews/legal-zoom-review-2021/. So if you’re looking for flexibility and protection, form an LLC now. And there are many types of LLC, such as Single-Member LLC, General Partnerships, Family Limited Partnerships, and more. Below are the steps you need to follow to form your LLC successfully.
Choose Your LLC’s Name
When choosing the name for your LLC, it must comply with your state’s rules. Even though these rules may differ from state to state, most states require that the name of your LLC must end with an LLC designator such as Limited Liability Company or Limited Company, or an abbreviation of these phrases. It must not be the same as other LLC business that’s already registered in your state.
Filing Articles of Organization
The next step involves filing articles of organization with your state’s corporate filing office. Check on the specific requirements needed to form an LLC in your state, and you can have it completed online or by using a form on your Secretary of State’s website. Remember to put in your LLC’s name, name and address of the registered agent, and other essential information.
Choose a Registered Agent
A registered agent is an individual or a company that will accept legal papers on behalf of the LLC if sued. They must have a physical street address in the state where the LLC is registered.
Member vs. Manager-Managed LLC
The next step is to decide whether you want a Member-Managed LLC or a Manager-Managed LLC. Most choose the former, which means the members of the LLC manage it. Manager-Managed LLCs are those operated by one or more outsiders, such as investors.
Create an LLC Operating Agreement
Every LLC needs an operating agreement, an internal document that establishes how you will run the LLC and how you will manage it. If there’s no operating agreement, the state law will govern how your LLC will operate.
Comply with Tax & Regulatory Requirements
The first thing to comply with is an EIN, or the Employer Identification Number is needed if your LLC has more than one member. You will also need your business license, depending on the type of business or where it’s located. Finally, the sales and employer taxes, which you will need to register with your state’s taxing authority.
Filing of Annual Reports
Don’t forget that most states will require you to file annual reports. Of course, you will need to pay the filing fee. It can be significant or low, depending on the state.
Out of State LLC Registration
If you’re doing business with another state, aside from the state where it was formed, then you will need to register your LLC in that state and appoint another registered agent. The requirements for out of state LLC will depend on the state you will register it in.