Once you find the courage to pursue your dream of forming your company, you will have to be ready to perform various tasks. Deciding to do business is only the start of your journey. There are a lot of things you have to consider, including completing the LLC paperwork.
Choosing To Form An LLC
One of the first things that you have to think about is the structure of your business. A popular choice for many startups in the United States is the limited liability company (LLC). With the protection that it offers for the personal assets of the owner, it can be the safest option for you. Aside from this, it can also minimize your business taxes and streamline the company’s administrative responsibilities. Additionally, it also provides flexibility.
A Step-By-Step Guide For Beginners
There are two ways to create an LLC. First, you can hire a service provider for you. Second, you can choose to do it. The first one is the easier option and may save you time. Before deciding on how you want to go about the registration, you have to understand the process first.
Many people think that the process of forming an LLC is complicated. Because of this, it can be a bit confusing for beginners. However, you can categorize the process into five simple steps. Take one task at a time to avoid confusion. You will also need to be patient. Another key is to have good attention to detail.
- Forming an LLC requires you to go through a formal process. Every state has its law when it comes to the registration of a business. Despite their differences, all states share one thing in common. Business owners have to file LLC paperwork to make the conduct of operations formal and legal. Choose a state that provides the most benefits for your company. For an easier option, you can opt for the state where you are currently living.
- The name of your company is important. But, choosing a name is not that simple. You cannot just use whatever you want. Your company has to follow the naming guidelines that the state implements. You will also have to make sure that no other business entity is using the name that you want. Check the availability through a business name search.
- The next step is for you to choose a registered agent. All states require LLCs to appoint a registered agent. You can nominate a service provider. You can also choose an individual from your company. The registered agent is your point of contact with the state. They will receive and forward legal documents on behalf of your LLC. Your LLC’s agent has to have a physical address in the state where you will form the company.
As mentioned earlier, each state has its own laws when it comes to the formation of an LLC, but they all require LLC paperwork. What you will need is to file Articles of Organization to the appropriate agency. Most states require owners to submit the documents to the Secretary of State. It also comes with a corresponding filing fee. In filling out the Articles of Organization, you will need the name of your LLC and basic information about your company’s registered agent.
Most states also allow business owners to choose how to manage their LLCs. You can either choose to be member-managed or manager-managed. If your company is member-managed, all members of your LLC share the responsibility. Every member is involved in making day-to-day decisions. If the LLC is manager-managed, it appoints individuals to handle the affairs of the business. The manager can either be one of the members or an outsider.
4.The next thing you have to do is get an Employer Identification Number (EIN), also known as Federal Tax Identification Number, from the Internal Revenue Service (IRS). You can think of the EIN as the Social Security Number of your company.
- To establish the terms of ownership and roles of each member, you may have to create an operating agreement. This step is optional in most states. As a formational document, the operating agreement will establish your company as a separate legal entity. It can also help maintain the company. If you decide not to create an operating agreement, your LLC has to follow state laws to handle its operations.
- Some business industries require companies to obtain state and local business licenses. Do your research. Find out if your company needs additional permits or licenses. If you do, file an application with the appropriate agency.
- If your LLC will sell goods and collect sales tax or it will have employees, you may have to register with the appropriate taxing authority in the state.
- Once you start operating your business, you will have reporting obligations. Most states require the filing of annual reports and fees.
Getting Help From Experts With LLC Paperwork
If you still find the process confusing or you do not want to go through the stress, you can always hire professionals. There are companies, such as DoMyLLC, that offer services for new business owners. They will serve as the registered agent of your company and file the necessary LLC paperwork.
Although having a service company comes with additional expenses, it offers many benefits. The convenience that the professional service provider gives makes the fee worth it. If you hire a registered agent, you can make sure that all your business documents are organized. It also ensures that the company gets all official mail and legal papers since it operates during regular business hours.
Additionally, a professional service provider helps protect your company’s privacy. It can withhold the name and home address of the business owner from the contact information of your LLC.
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