Forming an LLC, or a Limited Liability
Company, is similar to starting a business with a partner, but it offers
the strengthened legal protections of personal assets that a
corporation does, all while being easy to set up and run. Forming an LLC
is fairly simple, but the guidelines and laws differ by state, so make
sure you check the specific regulations in your state in addition to
following these basic steps:
Pick a Name
First thing's first: pick a company name. Your LLC will have to include the abbreviation “LLC” in the official title, and it has to be distinguishable from names of other businesses already on file in your state. You can log onto your Department of State’s website to look at their business name database and make sure you’re choosing an original company name. Once you’ve come up with a name, most states will allow you to reserve it for a small amount of time (30 to 60 days) by filing an application for a name reservation.File Articles of Organization
Every LLC has to file Articles of Organization with the Secretary of State’s office. This sounds more complicated than it is. Usually, it’s just a short form that you have to fill out that includes your name, the names of other members involved and all of your contact information. There will be a filing fee associated with this, usually between $30 and $200. You can use this online guide to find out if there are additional registration requirements in your state.Draft an Operating Agreement
Now that your company name is official, you’ll want to draft an operating agreement for your company that puts down in writing exactly what the business arrangement is, including what percentage each member owns, who is responsible for what roles, etc. Some states require this and some states don’t, but either way, it’s a good idea to have one. It can be as detailed as you like, but having something, even a barebones outline, will help your business in the long run.Some LLC's make the mistake of skipping this step and regret it afterwards. You can seek professional help in creating an operating agreement if you think you need to. It’s also a good idea to have a lawyer look it over too to make sure you're covered in the event that business goes sour.
Taxes
There are also additional tax and regulatory requirements depending on the state. Review these thoroughly, as it may turn out to be more advantageous for you to run a business as an individual rather than an LLC (for example, if your state charges additional fees and taxes for businesses). This is rarely the case, but it doesn’t hurt to do your research. Nolo offers some good advice and resources for figuring out how to get your LLC up and running.State Requirements
The rest of the process will differ from state to state. Some states, like New York, require you to publish your Articles of Organization in two newspapers designated by the county clerk. There are additional fees associated with these requirements, so make sure to plan accordingly for extra expenses.Forming an LLC can be an exciting and rewarding experience when done correctly. Keep the above tips in mind as you start the next chapter of your business!