How do I form an LLC?
The LLC formation process is one that is not too hard, not to easy, and must be done perfectly. With all of that said, it is definitely something that you can file on your own, or use a service to help you file. In many states, the filing process is somewhat simplified because they have online tools, and online forms to help you. In other states, you must have the forms signed by an attorney, or you need to have your registered agent sign before you can submit the forms to the state office. Even with these slight challenges, you can get the process done. For many other people, they don't want the hassle of filing on their own, so they will pay a service to help them file the paperwork.
What are the Steps to Form an LLC?
The steps for forming an LLC is similar in all 50 states, so this tutorial will be useful for you to read not matter which state you reside in, or which state you may be filing in for your business. So, read ahead and you will get a good idea of what are the main issues that you must go through to file for your LLC.
- LLC Name - The LLC can be a challenging part of forming an LLC, but it is not surmountable and you can definitely find a name if you put your mind to it. I would expect that this process will take at least a few days and maybe a couple weeks or more for some people who are very specific about the name and what they are looking for. The reason that this can take so long is that many of the names that you initially think of, might already be in use or not available due to a name conflict with another LLC name in use. The next challenge will be if you want to align your business name with a domain name. This can make the process twice as challenging, because domain names are also highly sought after.
- Business Address - Many states will want to know your business address and where you are located. The address must be located inside of the state that you are registering in.
- Mailing Address - The mailing address is where you want to receive mail initially for the limited liability company. In many states, such as California, you will need to supply an annual information update to the Secretary of State. This typically will cost a slight amount of money and you should be sure to make this filing ahead of time to avoid any late fees.
- Registered Agent - We have a primer on what is a registered agent, so we won't go into too much depth on what is this role and what is the importance of it. But what you must know is that the registered agent an agent of the company who has agreed to receive mail on behalf of the company and agrees to forward it on to the company. It is also the address where service of process will be sent in the event that your business gets sued.
- Member & Manager Information - The member and manager information is required in many states, but not all states. In general, a member is another word for the owners of the company. The Member is a person who is an owner. This is distinct from a manager of the business. The manager, is a person who does not necessarily own any portion of the business, and they can simply be a manager of a location, or multiple locations. There can also be a representation of a member-managed, which essentially means that the business is managed by the members. The business can also be managed entirely by the managers, which means that the owners are essentially silent investors into the business.
- Business Purpose - Many states, and not all states, will ask about the business purpose. In most case, the question is related to the state wanting to generally know what type of business you will be engaged in. This is most likely so that the reviewer can do a preliminary assessment if your industry is possible regulated by a state, local, federal agency. But even with this request from the state, the business owner is essentially responsible for making sure that they can legally be engaged in the business that they are engaging in. Finally, most states will allow the business to state that the LLC " will be engaged for any and all lawful purposes". This general clause will make it very easy for the business owner or Organizer to complete this portion of the form.
The State of California on their sample form provides the following business purpose: " The purpose of the limited liability company is to engage in any lawful act or activity for which a limited liability company may be organized under the California Revised Uniform Limited Liability Company Act."
With these general tips under your belt, you are ready to decide if you can move forward toward filing, or if you need to do some more research.
Talk to a CPA or Attorney
Many business owners, should talk to a professional CPA or attorney before filing for their LLC. If you have any doubt as to what you should be doing to file for your company, then definitely talk to a professional. In general, if the person is not a CPA or attorney, then you really don't need or want their advice and frankly they cannot provide advice to you. But just know that incorporations and LLCs are treated differently for tax purposes, and their are slight differences from a legal perspective which may make using a filing service or professional worth the slight amount of extra money that it will cost you. The peace of mind of using a professional will help you sleep better at night and also make sure that the filing is done right the first time.
Pay the State Filing Fee to Register LLC
To form an LLC in your state, you must supply the required filing fee. The fees vary by every state, so you will need to ensure that the amount your pay is correct. You can research fees on this site, and you should double check with the filing instructions provided by the Secretary of States office before filing your fees. On all of our State main pages, we have links directly to the states corporation division or business services pages where you can find out information related to fees.