If you had a brilliant business idea and found the right gap in the market to position your new enterprise, it is now the time to get your startup off the ground. But, before you can operate legally in your state, you’ll need to establish the legal structure of your new business and get your LLC paperwork in check.
Unsure how to get started? This guide will make it easier to navigate the process of forming an LLC. Let’s dive in!
Make Sure That an LLC is The Right Structure For Your Business
Today, in the US, there are over 28.2 million LLCs, and the number of domestic limited liability companies has been growing steadily since 2004. When looking at the features of LLCs, it becomes evident that this legal structure yields significant benefits to business owners, including limited personal liability, asset protection, tax advantages, less paperwork, and management flexibility.
Nonetheless, this business structure isn’t the only alternative available and, for entities such as banks and insurance companies, it might not be an option at all! Make sure to review your state’s requirements and work with an attorney to ensure that creating an LLC is the right choice for your business.
Choose a Name and State for Your LLC
Before heading to the local authorities to form your business, you’ll need to have a name for your LLC in mind. Although it is important to keep in mind what would work in terms of marketing and branding, there are also some legal requirements you’ll need to meet when choosing your name, and these might vary from state to state.
- Your business name should accurately describe the services offered
- You’ll need to add an LLC indicator at the end of your formal business name (i.e.: Limited Liability Company, LLC, LC, or Ltd. Co.).
- Your name must be unique and distinguishable from other active businesses in your area
- Your business name can’t include misleading terms or words that are connected to government entities, such as “FBI”.
- Alongside your formal business name, you will also need to register a trade name or “Doing Business As” (DBA).
An LLC name search will tell you whether your wanted name meets all the above requirements and it allows you to reserve your chosen name for a period of 90 days to 1 year.
Select a Registered Agent
After choosing your name, you’ll need to select a registered agent, which can be an individual or business designated to receive service of process (SOP) as well as legal and tax documents.
Registered agents should have a physical address, must be available during business hours, and should be a different entity from the LLC itself.
File a Certificate of Formation
Although you might have registered your business name and have a registered agent you can rely on, your LLC will not be official until you file a “certificate of formation”. This document, which is also called “articles of organization” or “articles of incorporation” depending on the state you operate in, will include all the essential information about your business.
Some of the details you’ll need to file a certificate of formation include your business name, address, the owner’s details, and your registered agent’s name. This document can be submitted online through the local office of the Department of State and comes with a filing fee of $50-$520.
Get Your LLC Paperwork in Order
Aside from the certificate of formation, you will also need to file other essential documents, including:
- Operating Agreement – a document that will describe how your business will be run as well as its processes, rules, and regulations.
- Federal Employer Identification Number (EIN) – EINs can be obtained free of charge from the IRS website and are essential for companies to legally pay their employees.
- State Tax Identification Numbers – when registering with the local Department of Revenue, businesses can obtain a unique tax identification number necessary to appropriately file taxes.
Seek External Expertise to Set Up Your Company
Setting up an LLC is a time-consuming process, which can also feel daunting for first-time business owners. However, getting this right is crucial to operating legally within your state!
Specialized LLC services can help you find guidance, avoid common pitfalls, and ensure that your new business can get up and running in no time! Even more importantly, expert LLC service providers will provide assistance over time and ensure that you stay compliant as your business grows.
Keep Growing Your LLC
Although filing the right paperwork and registering your business are crucial steps in establishing the foundations of a successful company, this is just the start of the journey!
Once you have formed your LLC, it is time to start growing your business, establish long-term goals, and define a winning growth strategy!