Starting an LLC is an exciting time for business owners, but it can also be difficult. From paperwork and certification to registration, there is a lot to think about.
This 6-step guide keeps the process as simple as possible. We will guide you through the LLC journey, from name selection to registration to LLC formation. It is important to note that the method of starting an LLC varies depending on the state in which you live. So check your local laws.
On the article:
6 steps to create a business
- Please select a business name
- Find a registered agent
- Obtain an EIN (Employer Identification Number)
- Submission of the Articles of Incorporation (Certificate of Establishment)
- Drafting an operating contract for the LLC
- Additional Things to Consider When Forming an LLC
1. Choose a trade name
Every business needs a name. Before registering your business, make sure a matching domain name is available. The last thing you want is to select a name to find that it has already been used or is trademarked.
Enter the desired domain into the search bar and hit buy itIf the domain is available, it will be for sale. If not, GoDaddy offers options that may inspire you.
Available Domains indicates that your business name is available, but please exercise caution and check with your registration office.
There may also be state restrictions on the words that can be used in business names. Restricted words may include “bank”, “trust”, “trustee” or “corporation”‘Basically, your business name should reflect your business and should not be misleading.
Once you’ve verified that your business name is available, you can purchase a domain, choose a web hosting plan, and create a website for your own online business.
To learn more about the importance of domains, watch the video below.
2. Find a registered agent
Appointing a registered agent is mandatory during the process of starting an LLC in most states. Your registered agent usually must have a physical address in the state in which your LLC is registered.
The LLC Registered Agent’s role is to pass important documents to key personnel within the LLC. A registered agent forwards documents such as legal notices and tax returns. Registered representatives should notify us of any legal issues as soon as possible. This is an important role and if someone in your company takes it, they need to be diligent.
In many cases, the Registered Agent Service option is highly desirable. In this way, someone (or a company) can be hired to handle legal and administrative tasks as a registered agent. Hiring someone is especially helpful if no one within the LLC is qualified or willing to take on the role. Or if your company does not have a physical address within the state in which it is registered.
3. Obtain an EIN (Employer Identification Number)
An EIN (Employer Identification Number) is a unique number provided by the IRS. It is essential for many types of activities such as opening business accounts, hiring employees, filing taxes (EINs are used to identify a business), and applying for licenses and permits.
Essentially, an EIN proves that you are an established business.
4. Submission of the Articles of Incorporation (Certificate of Establishment)
Your organization’s Articles of Incorporation (a.k.a. Certificate of Incorporation) is a form you can receive from your state secretary of state.
You must submit a form and provide the required information. Each state has its own form, so it’s important to make sure you’re choosing the correct form. You can expect to fill in typical information such as company name, business address, LLC owner name and address.
For form submissions, you may be required to pay an application fee. Fees vary by state. It might be as cheap as $50, but But it can cost about $100 more.
5. Create an Operating Agreement for the LLC
An operating contract is a bit like a contract between owners. This document is legally binding and outlines how LLCs are governed. Importantly, operating agreements are in place to outline how profits and losses will be shared.
An operating agreement is a legal document, but you can see how it can be used to resolve potential future conflicts. This agreement means that all owners are in agreement on some of the most important aspects of starting an LLC.
It may be helpful to work with an attorney when drafting this contract.
6. Additional Considerations When Creating an LLC
Finally, think about any other items that are state-specific or required to start your LLC on the best possible foundation.
Additional considerations include:
- Setting up a business bank account. A separate account for managing business finances is a best practice for any business, but special attention should be paid to keeping your personal finances separate from your business finances when starting an LLC. This makes your tax returns infinitely less confusing and you have to remember that with an LLC you will have your own bank account as it is a separate entity from you.
- Obtain Permits and LicensesCertain industries and locations may require specific licenses and permits. Make sure all your paperwork is in order and legally compliant.
- Registration to do business in another state. If you are registered in one state and have assets or employees in another state, you may need to register to do business in another state. This depends on the state you work in. If you need to register in another state, you also need a registration agent in that state.
What Are the Benefits of an LLC?
Starting an LLC has its advantages. Below we have listed some of the most desirable reasons why you might want to switch to the LLC business model.
- limited liability protection Removes liability from you personally. Your business becomes its own entity and is responsible for its own debts or legal obligations.
- pass-through taxation Owners can take profits without paying taxes firstProfits and losses are reflected on the owner’s personal tax return.
- Easy to form and maintain (Especially now that you read this article). LLC can be configured in just 6 steps.
- business reliability Developed from having a registered LLC business. It can also help retain higher paying customers or justify price increases.
- Transfer of ownership Easy and flexible for LLCs.
I answered your question about starting an LLC with the following:
it is common to have many Of the questions before deciding whether to make the leap into the LLC business. Here are answers to frequently asked questions.
What is the lifespan of an LLC?
LLC life spans vary, State requires LLC life to be 30 yearsIn some states, an LLC has an indefinite lifespan and can continue until its owner dissolves.
How do you make money with an LLC?
You can make money as part of an LLC just like any other business. Your LLC may make money by buying and selling products by selling services or offering memberships and subscriptions to customers.
The main difference is how the LLC makes money. As an owner, you may also undertake work. Therefore, the LLC pays you wages.
Do I have to pay myself a salary from the LLC?
You will need to seek financial assistance before deciding how to pay for yourself through the LLC, but as noted above you have the option of paying for contracted hours for services that benefit your business. can receive a distribution.
What are the disadvantages of LLC?
Managing an LLC requires additional work that may be perceived as a downside. For example, paperwork and filing must be managed separately. If you used to manage your taxes alone, you may start considering an accountant to help you manage your finances when starting your LLC.
Can I use my personal money for the LLC?
As a business owner, you can use your personal money to fund the LLC. This is especially common in the early days of starting an LLC.
Final Thoughts on Starting an LLC.
Owning and managing an LLC goes beyond the six steps above. Once you know how to start your LLC, you need to manage it and keep your newly found LLC aligned with the state’s ongoing requirements. Reports and accounts must be submitted accordingly. In addition, we should be aware of potential legislative changes.
It can be overwhelming, but we have attorneys and accountants who can help you take the right steps when starting an LLC. You will feel done.