The authority to create a limited liability company rests with each state and the District of Columbia. Although each jurisdiction has formal LLC creation requirements to which you must adhere, you can complete the process rather quickly. Often times, you can avoid delays by familiarizing yourself with the jurisdiction’s requirement before you begin the formation process.
Fit your business needs with the right LLC package
Reserving a Name
All states require you to choose an LLC name not currently in use by another business entity within the jurisdiction. To avoid delaying the legal formation of the LLC, you may reserve a business name prior to filing the formation documents. Most jurisdictions provide you with access to its searchable database of unavailable business names. Once you determine that your name choice is available, most states allow you to reserve it, which ensures other businesses do not create an entity under that same name. For example, New York allows you to accomplish this by completing a one-page form and submitting a $20 fee. This reserves the name for 60 days, with the possibility of two extensions for a total of 180 days.
As a prerequisite to legal formation, every jurisdiction requires you to submit a short document that includes the name of the LLC, the name and address of the agent you authorize to accept legal service of process and the location of the LLC’s principal office. Jurisdictions refer to this document as the articles of organization, certificate of organization, certificate of formation or other similar name. Legal creation of the entity occurs at the moment the appropriate state office files this document. Since the document does not require extensive amounts of information, you can complete and submit it in a relatively short time.
To ensure the business operations of the LLC run smoothly immediately upon formation, it is imperative that all LLC owners draft an operating agreement that provides all procedures members must adhere to. Most jurisdictions do not require an operating agreement and will not delay formation of the LLC in the absence of one. However, the lack of an operating agreement may delay the commencement of LLC business operations if members are in disagreement on how to operate the venture.
An LLC can engage in interstate business; however, it is required to register as a foreign LLC in each state in which it does business. To register, the LLC must file a document to obtain a certificate of authority. The time it takes to complete and file this document is comparable to the time it takes to file the articles of organization. For example, Delaware requires all foreign LLCs to register with its secretary of state by filing an application for registration, which requires the LLC’s name, state of formation, the nature and date of its initial business dealings in Delaware and the name and address of its agent. If an LLC does not comply and register in a state in which it conducts business, members may not seek judicial intervention in that state to resolve business disputes.