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Everything you need to know about building an LLC

LLC (Limited Liability Company) is an outstanding way to create a wall between personal and business assets. For example, if your small business gets sued due to unpaid debt or any other legal reason, then your assets will remain unaffected and secure.That’s not it.

The flexibility of tax and maintaining work records in a convenient way are other features that make it one of the mostdesirable business structures. To top it off, LLC will help your business to build credibility, and suppliers will have no problem trusting you. 

However, the most challenging part of an LLC is its initial phase. But we have made it simpler by listing down everything you need to be acquainted with in order to form an LLC:

1.      Picking your State

Business laws vary from state to state. In all likelihood, you might be tempted to set up your LLC in Delaware and Nevada because they offer more business-friendly laws compared to the other states. However, it would be in the best of your interests to establish an LLC where you live and prefer to do the business.
The paperwork and extra fees that come up with forming a foreign LLC might prove to be too much for you. To be more precise, if you live in Texas, you should consider building a limited liability company Texas.

2.      Checkout for the availability of your LLC’s name

Once you are all sorted out about the location, it’s time to cherry-pick a suitable name for your LLC. Again, the specific rules of states might influence, but the general guidelines for selecting a name remain more or less the same everywhere. They are as follows:

·         The name must carry the phrase “limited liability company” or its abbreviation, that is, L.L.C or LLC
·         You are not allowed to opt for a namethat can easily be mistaken with a government agency’s name, such as State Department, Treasury, FBI, etc
·         And an obvious one. You can’t have the same name for your LLC which has already been taken by another LLC

Your state’s LLC office is the place where you can find out whether or not a particular name is available. Almost all the states permit to reserve the name in return for a small fee. Though the length of the reservation period and charges rely on the choice of your state.

3.      Choose a registered agent

This is the requirement of nearly all the states. A registered agent is a person who acts as a third party to bridge the gap between your LLC and the state. For example, if the state sends any confidential papers, like that of a lawsuit, they will be received by your registered agent. 

It is not necessary to involve an outsider to be your registered agent. As a matter of fact, any member of your LLC can be that person. The registered agent must be the resident of the same state where you are operating the business and ensure his availability during business hours.

4.      File articles of your organization with your state

These are the essential documents needed to form the LLC. Some states refer to them as “articles for organization” while others dub them as “certificate of formation” or “certificate of organization.”
Typically, these articles would require your following information:

·         The name and address of your LLC
·         The names and addresses of the LLC’s members
·         The duration of its existence
·         The purpose behind forming the LLC
·         Registered agent’s name and address

Some states have made it mandatory for the registered agent to sign the paperwork along with the person forming the LLC. Moreover, at the time of submitting these articles, you will be charged a filing fee, which is generally around 100 dollars, but it varies from state to state.

5.      Drafting an LLC operating agreement

In this document, you have to give a clear picture of how your LLC is going to conduct its business. At times there could be a rift between the members due to financial reasons. This agreement will rescue your LLC from all such problems because you have to mention is this agreement about how you are going to solve such issues.

In general, you have to state the following things:
·         How the profit and loss will be divided among the members
·         What role each member will have to run the company
·         The process of voting
·         The circumstances which may lead to dissolving the LLC
·         On what basis the members will be either added or removed
Get your EIN

Once your documents are accepted, you will receive a certificate from the state which will formally confirm your existence. Next, you should apply for an Employer Identification Number (EIN). It is essential to have EIN if you want to hire employees and open business bank accounts.

Final thoughts

Given the variety of advantages, it does not seem to be a massive procedure to form an LLC. TheLLC might be a relatively new business structure but, without a shadow of a doubt, you can rely on it for all the right reasons.

Author Bio

Audrey Throne is the mother of a 3-year old and a professional blogger by choice. Throne is passionate about lifestyle, business, automotive, technology and management and blogs frequently on these topics.

Find her on Twitter: @audrey_throne.

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