Many people see the United States as a land of opportunity. That is why thousands of Americans try to pursue their dream of being their own boss every year. If you are one of those people who think that entrepreneurship is right for them, then contemplate whether it is the right time to start a business venture or not. There are many factors to consider. Additionally, there are multiple decisions to make, like which LLC formation package to choose.
Understanding LLC And An LLC Formation Package
One of the biggest decisions to make is choosing the right business entity structure. There are various types to choose from, including a sole proprietorship, partnership, corporation, and limited liability company (LLC).
For many startups, especially those whose owners are new to the business world, the most obvious choice is an LLC. Known as a hybrid structure, an LLC offers features from both a partnership and a corporation.
Like a partnership, the default tax treatment of this structure is pass-through taxation. It allows you to prevent double taxation. That means you do not have to file corporate taxes. Instead, the profits and losses of the business are passed through to the owners known as members.
At the same time, an LLC enjoys liability protection similar to that of a corporation. Members will not be held personally liable for the actions and debts of the company. That means the company’s obligations will not affect personal assets.
Forming An LLC
The formation of an LLC involves multiple steps. First, formal paperwork must be submitted followed by paying the corresponding fees, and then ensure compliance with state obligations.
To keep track of everything, you may need an LLC formation package that will serve as a checklist of all the necessary information.
LLC Formation Package
In figuring out what kind of package is right for your business, understand the things that need to be accomplished. While each state may have different regulations and processes, they have certain similarities as well. Take note of these to avoid any issues:
- Name – States have set guidelines in naming LLCs. First, include a proper designator. In most cases, that means using the phrase “Limited Liability Company” or any of its abbreviations. Second, ensure the distinguishability of the company name. If any other entity in the state has already taken the desired name, then it cannot be used anymore. To check its availability, you would have to do a business entity name search. If you opt for the services of a third-party organization like DoMyLLC, then request the inclusion of a name availability check in the service.You may also reserve the desired name with the state. That requires the submission of formal paperwork and payment of a filing fee.If you decide to use a different name from what was listed on the company’s formation documents, then file a fictitious name. This is also known as an assumed name or doing business as. Keep in mind that a company can only apply for a fictitious name after successfully registering the company with the state.
- Registered Agent – Companies need to nominate a registered agent in the state where they choose to form an LLC. Most states allow the appointment of an individual resident or a company. The registered agent will receive all legal correspondence on behalf of the LLC. DoMyLLC can serve as your registered agent. We are authorized to transact in all 50 states.
- Articles Of Organization – Business registration will be formalized only after the formation documents have been successfully filed with the state. Whether it is called the Articles of Organization or Certificate of Formation, this paperwork will ensure the legality of the business operations. The filing of this document comes with a fee.Typically, the Articles of Organization requires the following pieces of information:
- LLC Name
- Purpose Of The Business
- Principal Office Address
- Name And Address Of The Registered Agent
- Management Structure
- Duration Of The Company
- Operating Agreement – To set out the rights and responsibilities of the members of the LLC, prepare an operating agreement. This document will also specify the distribution of profits and losses, management structure, and other processes to run the company. Check out this article to further understand this document.
- Employer Identification Number (EIN) – The EIN is like the social security number of the business. It identifies the LLC. It needs to be used for tax filing, hiring employees, and opening business bank accounts. Apply for an EIN from the Internal Revenue Service (IRS) by submitting a completed Form SS-4. This application is free of charge.
Depending on the company’s activities and the location of the primary place of business, you may need to obtain additional business licenses and permits. Check these with local and state government agencies. Most states will also require a company to submit annual or biennial reports as part of ongoing compliance obligations. These may require the filing of formal paperwork and payment of a corresponding fee. Tax obligations will vary as well, depending on the activities and the state laws.
Get Expert Help
Having a complete LLC formation package will help ensure a smooth application process. It will also help get the state’s approval for registration.
While knowing the requirements will allow you to prepare them, hiring a reliable third-party organization like DoMyLLC can make the whole ordeal hassle-free. Our team of experts can also ensure business compliance.
Our services range from formation to ongoing compliance. We can prepare and file the LLC’s registration documents with the chosen state. You can even request to include a name availability check and EIN order. We are also authorized to serve as a registered agent. Depending on the circumstances and needs, our team of experts can provide a personalized solution.
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