Any small business owner who is looking at registering a company in the USA would prefer to start a Limited Liability Company (LLC). This is because LLCs are simple and flexible to operate and have liability protection. This blog gives you a thorough idea of what an LLC is and how one can register it.
What is an LLC?
An LLC or Limited Liability Company is a legal entity that business owners in the United States of America can select for the operation of their enterprise. When an LLC is registered, it protects the members of the company or the company assets against legal troubles when the company suffers a loss. The biggest advantage of an LLC is its flexible taxation option. Some of the small business owners may be taxed as a corporation or some may be taxed as a sole proprietor. A tax advisor can help in giving you the best taxation option for your LLC.
How Do I Set Up An LLC?
Here are seven informational steps that will help you set up an LLC in the easiest way. You need to know that there may be differences in the laws and processes from one state to another in the US. A business advisor is the right person to guide you here.
Step #1 - Give your business a name
First things first, you need to give a name to your business before you plan to register it as an LLC. You need to get out of your marketing mind and get the right name that meets your service and business.
Make sure the name you are choosing for your business does not have any copyright issues and is unique. Some states do not allow you to choose the same name of another business that is operating in the same state with the same name. In such cases, you need to get a different name or add a prefix or a suffix – mostly “LLC” or “limited liability company” along with your business name.
Review your state’s LLC naming rules and regulations and check out the name’s availability by visiting the website of the state that does business filings.
Step #2 - Deploy a Registered Agent
Now that you are aware that the rules and regulations while registering an LLC vary from state to state across the US, it is good to designate a registered agent while you plan to start an LLC.
The registered agent is someone who receives official documents like subpoenas on behalf of the LLC. Once the legal documents and writs are received, the registered agent hands over them to the LLC.
Who can be your registered agent? Anyone above the age of 18 years can be deployed here. You can self-deploy yourself or any of your employees and a registered agent. One thumb rule, the registered agent must provide and be available at the address within the state during normal business hours where you choose to start an LLC.
You can also choose to hire and deploy the agent from a company that provides registered agent services. Check out the pricing and choose someone who has been in the field and has expertise.
Step #3 - Get your State’s LLC Articles of Organization Form
When you plan to register an LLC and establish it as a legal entity, you need to file a document with the state agency that takes care of the business filings of the state. This document that you file is called the Articles of Organization form in most of the states across the US. You can visit the business registration website of your site to do the needful.
Step #4 - Prepare the LLC Articles of Organization Form
There are specific requirements and procedures that you need to follow while you register an LLC and prepare the form. However, the basic format of the form includes this.
- The name of your business
- The address of your business head office
- The goal or purpose of your business
- How your LLC will be managed
- Contact information of your registered agent
- Signature of your registered agent.
- Your LLC’s duration
Once these details are filled in, the business owner, organizers or applicants need to sign the form. You need to note that in Nebraska and New York, you need to indicate your desire to register an LLC by putting up a notice in the local newspaper. This needs to be done before you file the Articles of Organization.
Step #5 - File the LLC Articles of Organization Form
You need to double-check when you are planning to submit the LLC Articles of Organization Form to your state. You also need to pay a filing fee that will vary from state to state across the USA.
As the next steps, your formation documents will be approved and you will be issued a certificate by the state, indicating your LLC is verified, approved, and registered. You can use this certificate to set up your business bank account or use it as a document to get your tax ID.
Step #6 - Make an Operating Agreement
You need to create an operating document once you receive your LLC certificate. This document needs to have all the details of financial, legal, and managerial rights that the members of your LLC need to follow.
You also need to clearly mention how the profits will be distributed, who contributes to the business capital and the steps to be followed when one of the members decides to leave. This information must be well-thought-out and relevant.
Most of the states across the USA do not demand an operating agreement. However, if your LLC is operated by many members, the agreement holds good as a rule book so everyone is aware of their rights and carries out their responsibilities in the correct way.
You can draft your own operating agreement in case the LLC is operated by a single member. If you have more members and are in complex situations, hiring an experienced attorney will help in getting the best pointers out.
Step #7 - Your LLC needs to be Active
Now that your LLC is started and registered, you need to ensure that it remains active. How to do it? Each of the states has its rules and you can refer to your state’s business registration website for the same. Make sure you follow all the rules laid down and fill out annual reports to keep the LLC updated. There is also an annual fee that needs to be paid from the LLC’s side. Ensure this is done for seamless progress.
With all of this, if you wish to expand your business or register a new LLC in a foreign state, you need to follow the same process keeping in mind the rules laid down by the concerned state.. In case you are unsure or need a piece of expert advice, choose a business advisor who has expertise in LLC registration and build your business.