Setting Up An LLC:  Your 7 Steps Guide On How To Form An LLC  

By: John C. Anderson|LRL Writer

The LLC or the Limited Liability Company has become very popular nowadays among small companies desiring to incorporate. Setting up an LLC is actually a simple process which does not take long if one is ready with the business organizational process. In fact if the complexity of the business organization is not much then the process of setting up an LLC takes very little time.

Here Are The 7 Steps You Need To Take On  

How To Form An LLC:

1.  LLC articles of organization form for your state should be obtained first. This is simple documents that you can easily prepare in a few minutes by filling out the forms provided by the state. Find out the basic rules; like choosing an available business names, newspaper notice, etc.  Obtain all the necessary licenses and permits required for your specific type of business.

2. Name your business that suits your state's rules for business names. The actual name part is flexible while restrictions are applicable on words such as 'corporation', 'insurance', 'incorporate', 'city' among others. Keep in mind, while setting up your LLC remember the legal name of your company must end with LLC and you cannot share the same name with another company. You can find out from you state's LLC office whether the business name is available or not, also to make you won't violate another company's trademark.

3. LLC articles of organization form needs to be filled. This is a simple process where you need to fill the name, address, business purpose, registered agent and the names of the members or owners. 

4. Notice in a local newspaper may be required if you are in certain states like Arizona or New York. It is better to find out whether this is required for your state. It is a simple announcement of your intentions of setting up an LLC.

5. LLC articles of organization form is to be submitted to the secretary of state. This requires a filing fee which ranges from $100 to $900, depending on the state. Some states have a separate corporate tax on top of the filing fee.

6. LLC operating agreement can be made after the submission of the articles form. If you are the sole owner of the business, then this may not be required while setting up your LLC. However, it is better to have an operating agreement whether there is one or more owners. Although, it is rarely required by state law, it is important that you create one.

7. Create an operating agreement in which all terms and conditions are spelled out clearly. Terms such as financial contributions, percentage interest in the business, sharing of profits, member's voting power, "buy-sell" provisions, members responsibilities, quitting the business and other important aspects can be covered here. When setting up your LLC it is always advisable to have everything in writing even among friends or family members.

For setting up an LLC you can choose to hire an attorney if the business organization is complex. The simple formation type can be handled without the help of an attorney very easily. It is better to have the LLC operating agreement ready beforehand although it is not required until later. Then the terms and conditions are clear to each member seeking an LLC. It is better for small companies to form the LLC in the state in which the major business will be done. Although not mandatory it is always advisable to consult with an attorney if there is any doubt regarding setting up an LLC.

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