5 Easy Steps to Forming a Limited Liability Company (LLC)

When starting your own business you will want to decide if you will have a sole-proprietorship, a partnership, a limited liability company (LLC), or form a corporation. With a sole-proprietorship or a partnership you are personally liable for many of the financial or legal issues of your business. To avoid personal liability for their business many small business owners choose to create an LLC. Creating a corporation can be both expensive and complicated but forming an LLC is a pretty simple, and fairly inexpensive, process. Even though forming an LLC is fairly simple, it still serves to separate your personal responsibilities and those of your business.

To form an LLC for your business all you need to do is follow these five simple steps:

Step 1 – Choose a business name. To form an LLC you will need to find a business name which is not already in use in your state and complies with your specific state’s LLC business naming rules. To obtain the necessary information on name requirements for your state you will want to contact the Secretary of State’s Office of Corporations in your state. Your LLC’s business name can be just about anything as long as it does not include the words “bank,” “insurance,” “corporation” or “city” and needs to end in “LLC” or other designations of “LLC” approved by your specific state.

Step 2 – File Articles of Organization With Your State, Pay Their Fee. Forming an LLC requires that you file a document called “Articles of Organization” with your state. Your state’s Secretary of State’s Office of Corporations has some fill-in-the-blank forms you can use for this purpose. The forms are very straight forward and require simple information such as officers names, address of your business, etc…

Forming an LLC also will require that you pay a fee to file your Articles of Organization in your state. The filing fee varies anywhere from $100 to $1000 depending on which state your LLC resides in.

Step 3 – Create an LLC Operations Agreement. Your business will want to create an LLC Operations Agreement document as well. This document is simply an agreement amongst all of the people who will be managing the LLC. Your LLC Operations Agreement document will lay out the structure of the business and the rights and responsibilities of each party.

You will not be required to file your LLC Operations Agreement with the state but will need it if any legal or financial issues arise at a later date.

Step 4 – Publish Intent To Form an LLC. Your Secretary of State’s Office can tell you if you reside in a state where it is required to publish a notice in your local newspaper that you intend to form an LLC. Some states do, and others do not.

Step 5 – Obtain Business License and Permits. Once your LLC is set-up and official, you will need to obtain a business permit, federal tax ID, and any local zoning permits required by your county. Once you have completed this step you can legally open for business.