Establishing a Limited Liability Company (LLC) for your business could be one of the best ways to get your company up and running while securing proper liability protection. The steps for creating an LLC will differ somewhat based on your state and the type of business you’re in.
Generally, the following these steps:
- Choose a Name for Your Business: Most states require companies to choose a name unique from any other organization in the state and to include an “LLC” designation of some type within the name.
- Set Up a Registered Agent: A company or individual acts as a registered agent that will accept legal correspondence for your business, such as if someone files a lawsuit against your business.
- Prepare the Operating Agreement: You’ll need to complete an LLC operating agreement that outlines the details of your business, including who owns it (and separate ownership rights) as well as any profit allowances, who will be members, and how the business is passed down if the owner dies.
- File Articles of Organization: Most states require companies to file Articles of Organization (sometimes called other terms). This alerts the state of the business, including its physical location, the name of the registered agent, and the reason the LLC was formed.
- Registered to Do Business in Other States: If you plan to sell products or services in other states, you’ll need to establish the legal right to do so in each state.
- Obtain Necessary Business Licenses and Permits: Many states and local communities require companies to obtain a business license and necessary permits to operate in the state.
- Meet Ongoing Legal Requirements: It is likely that your business will need to keep the state updated on your business over its lifetime.
The process of establishing an LLC requires numerous steps, but it ultimately allows you to create a legally binding and protected company. Doing it properly could yield tax advantages and legal protections for your company.
The question is, where do you get started on this process, and what is required of you throughout it?
How to Get It Done – You Have Options for Setting Up an LLC in Your State
Now that you have a bit of an understanding of what needs to be done to set up an LLC, the next step is to get it done. The process is essential to get right and can take some time. Consider all three of these options before making a decision about which to use.
Do It Yourself
One of the steps you could take is to do it yourself. Though it can be complicated for some, it is possible to do all of the work in creating an LLC yourself. There’s nothing you cannot do on your own if you take the time to learn each area and ensure you are making well-informed decisions.
A key concern is that while you can do most of the work yourself, it may be challenging to do so without knowing your state’s laws and requirements. Most of this information is available online, and as long as you research it and apply the specific steps required, you can form an LLC on your own.
Remember that setting up an LLC is one step, but you’ll need to continue to meet the state’s requirements. That often includes filing annual reports, if required, as well as following any restrictions on setting up your LLC in more than one state. You also need to keep all business licenses up to date and meet all state and federal tax requirements.
You can do it yourself if you consider the following:
- Research your state’s laws regarding LLCs
- Follow all requirements for establishing your business name at the state level
- Obtain an EIN on your own
- Make sure you know the restrictions on LLCs in your state
- Follow up with any questions you have
- Submit and then follow up on your LLC application
- Ensure you continuously meet the requirements of a registered agent and any legal updates each year
Doing it yourself is certainly the least expensive option. It can be done well if you take the time to handle the learning aspect of it.
Use an LLC Formation Service
Time is valuable, and you may want the fastest and simplest way to get it done. In that situation, using an LLC formation service tends to be the best option. These organizations specialize in LLC formation. They have the experience you can rely on throughout this process.
An LLC formation service simplifies the process by having all state requirements laid out for you. They can also help you to ensure you are paying for the services you need without overspending.
Perhaps the biggest benefit aside from their experience is that the LLC formation service is a trusted resource to handle every step of the process, saving you time and money (especially if there are mistakes made in the process that end up costing you later).
Some of the ways an LLC formation service may be able to help you include the following:
- Be your registered agent, eliminating this frustration if you do not want to be worried about it
- Help you file all legal documentation, including Articles of Organization, properly to the right agencies
- Answer questions about your specific concerns, such as how to protect your business from claims
- Provide you with support services where you can ask questions and verify your rights and obligations
- Handle the entire LLC application process for you from start to finish, allowing you to just answer a few questions and move on
- Aid in the selection of a business name, registering it, and then obtaining a DBA if needed
- Get expert legal assistance to ensure the process is done properly
- Ensure you continue to meet all annual compliance over the lifetime of your business
- Help you obtain an EIN
The key to remember with an LLC formation service is that you can pick and choose the types of services you need. If you want them to handle just specific tasks, such as the filing of your Articles of Organization or creating the formal LLC agreement to ensure it is legally binding in your state, they can do that for you.
Find Out What Additional Services They Can Offer
When considering LLC formation services, also recognize that many of these organizations can help you with more than just establishing the LLC. They may be able to help you create a logo for your business and start on the branding of your company, for example. This can help you to get your business up and running right away.
Hire an Attorney to Do It For You
A third option is to hire an attorney. There are attorneys available that can help you to form your LLC. Typically, you will need to meet with them, provide information, and get legal advice on the next steps.
The attorney is then able to create the LLC for you, creating a legally binding contract for your specific needs. They will work to register your business name and then obtain an EIN for you. The attorney works with you to complete the entire process, one step at a time.
Attorneys offer some key benefits over other options:
- As licensed attorneys, they can help you handle even the most complicated cases and answer all of your legal questions about forming an LLC.
- Your attorney could offer guidance on minimizing risks, which could be higher in some industries as well as in some situations, such as partnerships. They may recommend moving to a corporation instead of an LLC.
- Though they are not tax professionals, some will provide guidance on the tax implications of various business formation options.
The biggest drawback of hiring an attorney to handle your LLC is that you’ll need to pay for their services. This may be a flat fee for initial needs. Then, there may be a retainer to pay to keep managing your needs.
This can become expensive over time. Keep in mind you still need to pay for a tax professional to help with the tax implications of starting a business.
Which Method is Best for You?
There’s no single method that is best for everyone. Rather, it’s best to choose the solution that’s the best fitting for your situation. Your budget is likely to play a role in this process, too.
