It's time to begin building your own business
and realizing your life long dream. Before you open your doors, one
necessary step is to legally establish your business. While some
business owners prefer partnerships or sole proprietorships, a limited
liability corporation (LLC) keeps your personal finances and assets
protected in the event that your business encounters legal issues.
1. Select a location for your incorporation.
In most cases, you incorporate in the primary state in which you do business. In the event that you have locations in several states, review your state-specific requirements first, as you may need to register in each state you have offices in or file foreign registration within the state.2. Choose a name for your LLC.
This step is slightly more difficult than it sounds. You must check with the state LLC office to determine whether a name is available for your use. You cannot take a name that is already registered within your state, even if you're in different industries. The phrase "limited liability corporation", or LLC, must be used as part of your company's title. Check your state law for blacklisted terms that cannot be used as part of the name. Ideally, you should research this when you first start your business, before you work on branding or marketing efforts. Each state has its own online database you can use for name research purposes.3. File the Articles of Incorporation for your business.
Other terms can be used for this paperwork, such as Certification of Organization (or Formation). Each state has its own form for this purpose. Standard information requested on this form includes the LLC name, the reason you're filing the Articles of Organization, the business address, and the registered agent. The registered agent is an actual person associated with the corporation who is available to receive service related to the LLC in the event of a lawsuit. Note that the availability of the registered agent name is part of the public record. If you don't want your name publicly available, there are services that provide you with a registered agent. Generally, an attorney offers this type of service, as it's convenient for him to directly receive any legal correspondence if you need assistance with lawsuits.4. Pay your filing fee and check for ongoing costs.
The exact amount you pay for forming an LLC varies by state, though it's generally in the $80 to $100 range. Some states also collect annual taxes for LLCs. Before forming your corporation, look over all associated costs. In come cases, it may be more advantageous to stick to a partnership or sole proprietorship.5. Create an operating agreement and establish a management structure.
After you successfully incorporate your business, establish a management structure. This operating agreement covers essential information, such as who has ownership in the company, the rights of members, each members' responsibilities, the projected profit split, how to handle losses, how interest stock selling functions, and how meetings are run. It essentially acts as a blueprint for your day-to-day business, spelling out everything necessary to keep your members happy and the business functioning smoothly. If you don't know where to start with an operating agreement, your state and other online resources have templates available to help. Note that you do not file any of this documentation with the state, as it is confidential and sensitive business information.Forming a LLC takes some time to figure out, but the process is fairly straightforward and can be accomplished with or without the help of an attorney. Get your business structure in place to get off to a strong start. It's tempting to throw yourself into the work after you've officially filed your paperwork. Take plenty of time on your operating agreement so you aren't running into issues right from the get go.