Forming an LLC
LLC or a Limited Liability Company is exactly what the mane denotes and is a flexible business model. It has become immensely popular due to this flexibility and many other characteristics which are helpful in business. When you open limited liability companies taxation will be done as for a partnership while giving the owners personal protection from debts related to the business which is something generally provided to corporations.
An LLC can be opened with ease if you can adhere to a few rules and regulations governing the subject. The key to forming an LLC is to do it right with the proper paperwork within the given legal structure. There are slight changes in the rules and regulations that differ according to the state you are in. Therefore, when you are opening a LLC you should always refer to the legal requirements of your state. The steps that you can take to form a Limited Liability Company are as follows:
- The business has to be named in line with the rules that apply to LLCs in the particular state that it is going to be located
- The filing of the Articles of Organization and any fees attached to be done
- Having an operating agreement that sets out the rights as well as the responsibilities of the LLC members
- Some states require a public announcement of the intent to form an LLC
- All licenses and permits that relate to the business to be obtained
The business name
The name of the LLC has to be unique and should always end with ‘Limited Liability Company’. In each state they have certain words that people are barred from using in their names such as bank etc. You have to be careful of copyright laws when you register the name. Filing your articles of organization will automatically register the name.
The Articles of Organization
This can also be known as the ‘certification of formation’ or ‘certificate of organization’ and refers to the document that is required to form the LLC. Each state may have different requirements regarding this and also have fees which vary according to the state. Sometimes it is $100 and other states charge as much as $800 in addition to the filing fee as an annual tax.
Articles of organization carry the information relevant to the LLC and its members. Its location and other relevant details will be shown here.
Registered Agent
This person will be the one authorized by the LLC to act as its agent in all matters of ‘service or process’ and will be the one contacted in case of a legal dispute. This is usually a person who is a member of the LLC.
The Operating Agreement
Forming LLCs are usually done by Operating Agreements. This is where the rules and regulations of ownership, member’s rights, voting powers and responsibilities are set out among other things. In short it will show how the business is to be run and the procedure when dealing with specific situations the LLC faces from time to time. This includes all rules pertaining to the meetings of the organization as well as the procedure if a member wants to sell his interest in the organization.
Other requirements
In some states a public notice in a newspaper is required to do this over a period of time and then provide an ‘affidavit of publication’ to the LLC filing office. You are able to do this through your local newspaper. Every business requires that you obtain the necessary licenses and permits to operate the business.
Once you have completed the above steps you have officially filed the papers needed to establish a Limited Liability Company.
