For nearly a decade, Toni Matthews-El has published business topics ranging from cloud communication software to best steps for establishing your own LLC. In addition to Forbes Advisor, she's published articles for Medical News Today, US News and Wor.
Toni Matthews-El Staff ReviewerFor nearly a decade, Toni Matthews-El has published business topics ranging from cloud communication software to best steps for establishing your own LLC. In addition to Forbes Advisor, she's published articles for Medical News Today, US News and Wor.
Written By Toni Matthews-El Staff ReviewerFor nearly a decade, Toni Matthews-El has published business topics ranging from cloud communication software to best steps for establishing your own LLC. In addition to Forbes Advisor, she's published articles for Medical News Today, US News and Wor.
Toni Matthews-El Staff ReviewerFor nearly a decade, Toni Matthews-El has published business topics ranging from cloud communication software to best steps for establishing your own LLC. In addition to Forbes Advisor, she's published articles for Medical News Today, US News and Wor.
Staff ReviewerCassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Cassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Written ByCassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Cassie is a deputy editor collaborating with teams around the world while living in the beautiful hills of Kentucky. Focusing on bringing growth to small businesses, she is passionate about economic development and has held positions on the boards of.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Brette Sember, J.D. contributorBrette Sember is a retired attorney who has been writing and editing law and legal topics for more than 25 years. She is the author of more than 40 books, is a nationally recognized expert on divorce and family law and has a depth of experience that.
Updated: Jul 26, 2024, 10:04pm
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Setting up a limited liability company (LLC) properly is one of the most important steps in establishing your business. An LLC can offer your business liability protection as well as other perks. In this guide, we will walk you through how to start an LLC in just seven simple steps.
An LLC, is a type of legal entity that U.S. business owners can select for the operation of their enterprise. Creating an LLC protects an individual’s or group’s personal assets in case of legal trouble or bankruptcy. It also allows for flexible taxation options, as not all businesses operate in the same way. Some may elect for taxation as a sole proprietorship, but others may be taxed as a corporation. Consult a tax advisor to determine the best option for your LLC.
Use this seven-step guide to start an LLC today. Note that there are differences in laws and processes from state to state. Browse our state LLC formation guides for information specific to your state.
Marketing may be at the top of your mind as you consider names for your business. And while it’s important to choose the right name for branding purposes, your business name must also meet state law requirements.
In general, state laws won’t allow you to choose a business name that’s already being used by another business in your state. Most states also prohibit certain words that might imply you’re in a certain business, such as insurance or banking. You’ll probably need to include some version of “LLC” or “limited liability company” at the end of your business name.
You can review your state’s LLC naming requirements and find out if the name you want is available by visiting the website of the state agency responsible for business filings (usually the Secretary of State) and doing a name search.
Every state requires LLCs to have a registered agent. A registered agent is someone who receives official or legal documents (such as subpoenas) on behalf of the LLC. Once received, the registered agent then passes on these documents to the LLC.
Anyone who is at least 18 years old can be a registered agent—and you’re allowed to name yourself or an employee. However, the agent must be available at an address within your state during normal business hours. You can also designate a company that provides registered agent services. This will come at a fee, of course; pricing for registered agents may cost more than a hundred dollars per year.
Should I Be My Own Registered Agent?
You can legally act as your registered agent in every state. However, the availability of this option doesn’t automatically make it suitable for everyone. If you decide to act as your LLC’s registered agent, you should know that your name and address will soon become a matter of public record.
You must receive and handle crucial legal documents or notices as your LLC’s registered agent. If you are not as knowledgeable about local laws and believe you would struggle to manage this type of paperwork, acting as your own agent may not be best, even if the goal is to save money.
Carefully consider your options and perhaps even consult with a lawyer or professional agency before becoming your LLC’s registered agent.
To establish your LLC as a legal entity, you’ll file a document with the state agency that handles business filings in your state. In most states, this document is called the articles of organization, but some states use a different name, such as a certificate of formation. Each state has a form you can use. To find your state’s form, go to the same website you used for business name research.
Each state lists its specific requirements and procedures for those trying to form an LLC. Basic information you’ll need to provide includes:
Once these steps are complete, one or more business owners or organizers will need to sign the form.
Some states, such as Nebraska and New York, require you to publish a notice in the newspaper indicating your desire to register your LLC. This step must be completed before filing the articles of organization.
Check your articles of organization carefully before submitting them to your state. You’ll also need to pay a filing fee, which varies depending on the state where you’re forming your business.
When your formation documents are approved, you’ll be issued a certificate by the state to indicate your LLC is formally registered. Use it for other necessary tasks such as setting up a business bank account and getting a tax ID number.
An operating agreement contains the details of the financial, legal and management rights of all members of the LLC. More specifically, it can include how profits will be distributed, how members leave the LLC and who contributes capital for the business. In essence, it should contain all relevant information pertaining to the operations of your LLC.
Many states don’t require an operating agreement, but that doesn’t mean you don’t need to craft one. LLCs with more than one member or partner will want to create one to ensure everyone agrees on their rights and responsibilities. Even solo business owners benefit from outlining the details in writing.
Crafting your own operating agreement is one option, especially for single-member LLCs. And there are plenty of free templates online to get you started. For more complex situations such as LLCs with multiple owners, hiring an experienced attorney may be well worth the expense.
Setting up your LLC is only the start. Once it’s formed, you’ll need to ensure your business remains in good standing with your state. Again, refer to your state’s business filing website for current information on how to do so. You may need to file an annual report that updates information pertaining to your LLC and pay an annual filing fee.
Alongside knowing how to start an LLC, there are a few key details to handle that contribute to the success of the new entity or which may serve as additional requirements for running your business.
In addition to documents for establishing your LLC, you likely need to complete forms and submit fees related to business licenses and permits. This information is likely available from the same office or on the official website as part of the list of business forms and fee schedules.
Confirm the types of licenses and fees your business needs to operate legally within your state. Be mindful of important deadlines, as you will likely have to apply to renew your license or permit periodically. Failing to meet renewal requirements could cause your LLC to lose its status as a legally recognized business.
Obtaining an EIN is crucial for anyone seeking to start an LLC. First, it is an important means of separating your business entity and assets from your own finances. Additionally, banks often require an EIN when opening a business account for your LLC. Moreover, for some businesses, an EIN is mandatory. You should get your EIN as soon as you set up your new company.
As mentioned, specific actions help separate your private assets from those linked to your business. Having an EIN and getting a business bank account are two common ways to begin this process.
One related concern among LLC owners and members is how to pay themselves. Typically, this entails withdrawals from the business account associated with your LLC. Such a withdrawal would have to be labeled an “owner’s draw.” It allows you to treat yourself as an employee paid by the business, avoiding the issues raised by spending company money for private use.
You may register your business in as many different states as you want. Additionally, the state where you choose to establish your domestic or in-state entity can be somewhere other than where you live. You can set up your foreign or out-of-state entity if you have a registered agent within that state.
Creating a foreign LLC requires first establishing your business in a different state. If, for example, you originally incorporated your LLC in Delaware but wish to operate in Texas, you need to submit Form 304 or an Application for Registration of a Foreign Limited Liability Company to the Texas Secretary of State. Often, you must also provide a certificate of good standing and additional documentation to clear the way for registering your business in other states.
Check out our guides below for details on creating an LLC in specific states.
