An llc is a hybrid business structure that offers tax and structure flexibility of a sole proprietorship with the liability and asset protection of a corporation. It’s a popular choice for new businesses.
If you want to form an LLC, you’ll need to complete some key steps. These include filing articles of organization, registering a registered agent and setting up an LLC bank account.
Articles of organization
Articles of organization are a legal document that establishes your limited liability company (LLC). They tell the state key details about your business and include information about your LLC’s name and address. They also give you a place to send lawsuits and legal notices related to your business.
Each state has its own requirements for filing articles of organization. You will need to visit your state’s Secretary of State website to find out what the articles of organization form looks like and how to complete them.
The forms will need to include a description of the type of business you plan to operate, the purpose of your LLC, and if there are multiple owners or managers. They will also need to include the name and address of your registered agent, which is someone who receives lawsuits and other legal documents on behalf of your business.
A well-crafted operating agreement is a vital part of an LLC’s formation. It provides important details about each owner’s contributions, share of profits and responsibilities to the company and other members.
Every state has default rules on issues like LLC management, admitting new members and dissolution, but a written operating agreement gives you more control over these decisions. This allows you to choose the right rules that fit your LLC’s unique circumstances and goals.
An operating agreement will also contain provisions about how owners will allocate profits and losses. This is an important topic to discuss with a tax professional to ensure that each member receives a fair allocation of the LLC’s income.
It should also specify how owners can be removed from the LLC, if they’re not performing their duties or otherwise are no longer serving the best interests of the company. This includes determining how to assign the owner’s interest to their surviving family members or other beneficiaries.
Every LLC or corporation formed or qualified to do business in the state must maintain a registered agent. This person is responsible for receiving service of process notices and government correspondence, as well as compliance-related documents on behalf of the entity.
Often, the person designated as the registered agent will be an individual or a family member of an LLC’s owner. However, these people may not be at the physical address when the process is delivered or might not be familiar with what needs to be done in these situations.
For these reasons, it’s usually a good idea to hire a third party to serve as the registered agent for an llc. This way, the company can avoid these issues and keep its reputation intact.
Once you have formed your LLC, you will need to pay the one-time filing fee and annual fees that are required by each state. These costs can vary depending on your business needs and location, so it is important to understand them.
You will also need to obtain a tax ID number for your company and apply for a business license for your local area. In addition, you will need to hire a registered agent, a professional who can represent your company and keep track of any requirements for you.
LLCs protect owners from personal liability by making them liable only for the liabilities of the business they own. This protection prevents creditors from looking at an owner’s assets to satisfy a debt.