Low cost of creation is one reason the LLC has become a popular legal entity for new businesses. In its most basic form, an LLC may be created simply by preparing and filing a single form--called the articles of organization--with the state. Beyond the basic formation document, members (or owners) of a newly created LLC may want to consider drafting an operating agreement, and seeking accounting, tax and legal advice.
Fit your business needs with the right LLC package
LLC Articles of Organization
Typically, only a single document is required to create (or form) an LLC. The cost of preparing and filing the articles of organization is one of the basic costs of creating an LLC. The articles of organization usually include the LLC name, business address, a list of managers and the registered agent for the LLC. The articles of organization may need to include other information, such as whether members will manage the LLC, so management planning may need to be done prior to filing the articles of organization. All states charge businesses a fee for filing the articles of organization. The articles of organization can be amended, at an additional cost, if any of the LLC details change after the initial filing.
LLC Filing Fee
The official fees for filing LLC articles of organization vary from state to state, and typically range from $50 to $300 or more. States may provide other services, such as certified copies of the articles of organization and certificates of status, that can be obtained by paying additional fees.
In addition to preparing articles of organization, it may be a good idea to draft an operating agreement for the LLC and to hire a lawyer to do so. Unlike the articles of organization, there isn’t a specific form or list of items required for an operating agreement, which can set forth things such as profit distribution formulas, operations details and procedures for voting. Because the operating agreement is free-form and can cover essential LLC aspects, it can be beneficial to obtain legal counsel when drafting the operating agreement.
Obtaining Tax Advice
In addition to obtaining legal advice for the operating agreement, retaining other business advisers may be valuable when creating an LLC. For example, an LLC must be carefully set up in order to avoid being treated, for tax purposes, as a corporation. Obtaining tax and accounting advice, in addition to legal advice, can help members avoid having their LLC treated as a corporation. The advice of tax and accounting professionals can add to the cost of creating an LLC, but can be good investments. Flexibility is one of the major benefits of the LLC business form. However, that flexibility may require careful planning to ensure that the LLC is created in a way that meets the liability and tax treatment goals of the members.