Limited liability companies, or LLCs, are creatures of the state -- not the federal government. Therefore, specific steps or necessary documents may vary, depending on the state in which you base your new organization. However, the basic steps to create and file for an LLC should be similar for all U.S. jurisdictions. Understand that, for federal tax purposes, the U.S. government and Internal Revenue Service do not recognize LLCs as separate entities. Therefore, for IRS purposes, you must choose corporate, partnership or sole proprietorship tax treatment.
Fit your business needs with the right LLC package
Choose a unique name per your state's LLC regulations. You will not be permitted to use a "deceptively similar" name to another existing LLC. Your state will also prohibit you from using a similar name to an existing corporation,e.g., Microsoft, LLC. Most states will also not allow certain words in your legal name like bank, corporation and insurance.
File all required documents, typically called "articles of organization," with the proper state agency -- usually your Secretary of State. Articles of organization are similar in content to the "articles of incorporation" required when forming a standard corporation. The form typically includes the LLC name and address, registered agent information, business "purpose" and management information that identify the person who will manage the new company.
Pay all required formation and registration fees. Most states have reasonable registration fees -- in the $100 to $200 range. However, a few states, like California, require much higher registration fees, often from $500 to $800. You will also face an annual renewal fee to keep your LLC in good standing and active with your state. Annual fees are usually similar to initial registration charges.
Apply for all necessary licenses and permits required by your state or municipality. Registering your LLC and paying required fees without obtaining necessary licenses will prohibit your new LLC from opening its doors for business.
Write an LLC "operating agreement." This document explains all of the rights and responsibilities of the LLC owners -- usually called "members" in an LLC -- like who will serve as a managing member responsible for the day-to-day management of the company. Operating agreements are seldom filed with your state, but they are necessary for smooth operations. You should state the percentage of ownership for each member, how you will allocate profits and losses, voting rights of members, schedules for meetings and how members can buy or sell ownership interests.