Forming an LLC - Explained
Steps in Forming an LLC
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How is an LLC formed?
The LLC does not arise by default and must be filed with the secretary of states office. The process for filing the LLC is relatively simply in every state. Most states have an electronic system that allows the organizer of an LLC to easily create the entity.
What is the process for forming an LLC?
The process and information required in most states is as follows:
- Choose your LLCs name. The state provides a directory of business entities registered with the state. The organizer will search this database to determine if the intended LLC name is available for registration. If so, the organizer can reserve the name prior to registration. The name must contain the suffix LLC or other state recognized indication that the business operates as an LLC. Note: You may register a name in one state that is similar to the name of a business registered in another state. Registering an LLC name under state law does not assure that another person or business does not have intellectual property rights (trademark rights) in the name.
File the Articles of Organization. The articles of organization are the LLCs founding documents. The organizer can either prepare the articles and file it as a document or enter the information via the forms on the website. This document contains essential information about the ownership of the LLC. It generally identifies the LLC business purpose, the members and contact information (members are the owners and there must be at least one), a registered agent for the business (for official communications and service of process), the business location, and whether the business is manager-managed or member-managed. The organizer will self-identify and sign the articles on behalf of the LLC members. The organizer must certify that she has authority to do so. Any time any of the information in the articles changes, it must be updated with the state.
- Note: The operating agreement is the governing document for the LLC. Most states do not require that the LLC file the document; rather it must be maintained as a business record at the primary place of business.
- Registration Fees. The cost for registering an LLC varies by state. Generally, there is an initial cost and an annual filing fee that must be paid annually by specific date.
- Publication. A few states require that the LLC organizer file notice of the LLCs formation in a newspaper of general circulation. This is a legal formality that is intended to put the public on notice of the existence of the business entity.
- Other. Other steps in preparing the LLC for business include: requesting a business license with the local government; registering with the state or local government any name used by the business other than the legal name; and securing any occupational licenses for the operators.
- Business Entities (Intro)
- Why is studying business entities important?
- Considerations When Forming a Business Entity
- Holistic (Detailed) Overview of Setting Up a Business Entity
- What are Business Entities?
- What is a Closely-held vs Publicly-held Business?
What are the main types of business entity?
- What are the primary characteristics of business entities?
- What is Maintenance of a business entity?
- What is Control of a business entity?
- What is Compensation of business owners?
- What is Taxation of a business entity?
- What is Sales & Use tax?
- What are payroll and self-employment taxes?
- What are the major characteristics of a Sole proprietorship?
- Uniform Partnership Act
- Uniform Limited Partnership Act
- Partnership Agreement
- At-Will Partnerships
- Responsibilities of Partners to the Partnership
- Silent Partner
- Funding the Partnership
- How are Partners Compensated
- Splitting Equity in an Industrial Partnership
- What are the main characteristics of a Limited liability partnership?
- What are the main characteristics of a Limited liability company?
- Forming an LLC
- Articles of Organization
- Operating Agreement or LLC Agreement
- Why You Need an LLC Agreement
- LLC Compensation of Members
- LLC Taxation
- Converting to an LLC
- What are the main characteristics of a Corporation
- Articles of Incorporation
- What to include in the Articles of Incorporation
- Corporate Bylaws
- Exiting the Corporation
- Dissenter's Rights
- What are the requirements to be an S Corporation?
- Non-Profit Organization
- NonProfit Business Entities
- Private Foundation
- A Detailed Explanation of the Sole Proprietorship
- Taxation of Sole Proprietorship
- A Detailed Explanation of the General Partnership
- 50/50 Partnerships: Never a Good Idea
- Publicly-Traded Partnerships
- A Detailed Explanation of the Limited Liability Company
- A Detailed Explanation of the Corporation
- Keepwell Agreement (Letter of Comfort)
- Personal Service Corporation Definition
- A Detailed Explanation of the Non-Profit Entity
- Public Limited Company (UK)