How do I Form an LLC?

by David Ingram Google
LLCs offer liability protection to members.

LLCs offer liability protection to members.

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The limited liability company (LLC) form of business organization is a relatively new option in the business world, only first appearing in the United States in 1977. The process of forming an LLC varies slightly by state, but a good number of similarities exist among all states. Knowing the general process for forming an LLC can serve as a good starting point as you dig deeper into your specific state's requirements.

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Step 1

Ensure that the LLC form is well suited to your planned business. If you are looking for personal liability protection and concentration of managerial authority in a small group of owners, and if selling stocks and bonds is not a part of your financing plan, then an LLC may be the right form for your business.

Step 2

Select a business name that complies with the requirements in your state, and make sure the name is available. Generally, states require LLCs to include “Limited Liability Company” or “LLC” at the end of their name. Each state provides a method for checking your desired name against a statewide database of business names to ensure the name is available before filing your official registration. Some states provide an online name verification service, while others still require correspondence through the mail.

Step 3

Select a registered agent after choosing your initial members. The state will use the registered agent as the go-to contact for official and legal matters. Registered agents do not have to be members or employees of the LLC; consider appointing your attorney as your registered agent to ensure that he is immediately informed of all legal issues with the state.

Step 4

Create and file your LLC articles of organization. The articles of organization act as the official registration form for your LLC, setting forth its name, address, purpose and contact information for its registered agent. Most states provide ready-made templates, similar to tax forms, that you can complete and send through the mail.

Step 5

Draft an operating agreement, regardless of whether it is legally required in your state. Set up the rules and guidelines for how the members will run the LLC. Start by stipulating what each member brings to the table in terms of assets and responsibility, then set forth how profits and losses will be distributed among the members. Wrap up the operating agreement with provisions for adding or removing members, and for dissolving the business.

Step 6

File a statement of information with the state if required. Only a few states, such as California, require a statement of information. The statement includes the same information as the articles of organization, with the addition of information for each member and the chief executive.

Step 7

Publish a notice of intent to form an LLC in a newspaper if required in your state. As with the statement of information, only certain states set this requirement for LLCs. Contact the Office of the Secretary of State to determine whether this requirement exists in your state. If it does, ask about any required format and a list of approved publications in which to publish the notice.