How to Start Your Own LLC

By Marie Murdock

Many people are opting to form an LLC, or limited liability company, for their business organization structure. Wyoming was the first state in the United States to enact LLC legislation, and other states began to follow suit in the late 1980s to mid 1990s. LLCs offer several advantages to the small business owner over corporations or partnerships. Generally, an LLC is easier to form than a corporation, requires less ongoing paperwork, and offers certain tax advantages over a corporate structure. It also offers more legal protection for its individual owners, known as members, than a partnership does for its partners.

Many people are opting to form an LLC, or limited liability company, for their business organization structure. Wyoming was the first state in the United States to enact LLC legislation, and other states began to follow suit in the late 1980s to mid 1990s. LLCs offer several advantages to the small business owner over corporations or partnerships. Generally, an LLC is easier to form than a corporation, requires less ongoing paperwork, and offers certain tax advantages over a corporate structure. It also offers more legal protection for its individual owners, known as members, than a partnership does for its partners.

Step 1

Contact your Secretary of State’s Office at the number listed on its website to see if your proposed business name is available. In lieu of phoning or emailing, many states will have a name search feature on their websites for use in determining if the proposed name of your LLC is already taken. Most states require that no LLC have the same name as any other LLC or formed business in the state, so if you decide on a name prior to organizing the company, you may file a name reservation request with the Secretary of State to hold the name for a specified period of time. Most states require that the LLC indicate its limited liability status by including "LLC," "LC" or something similar in its name.

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Step 2

File Articles of Organization with the office of your Secretary of State. Many states have online forms for this purpose and allow you to pay all filing fees with a credit card. LLC organizational forms are generally straight-forward, requiring the name of the limited liability company, the name and address of the registered agent for the organization and the stated purpose for which the business is being formed. Some states also require that the Articles include the names of all the members and/or managers of the company. Other states may refer to the initial organization document as a Certificate of Formation as opposed to Articles of Organization; however, both documents serve the same purpose. State laws vary regarding filing location also, with one or more states requiring organization at the local county level.

Step 3

Prepare or have an attorney prepare an operating agreement, which is the governing document for the LLC. Many states do not require operating agreements and some single-member LLCs or small LLCs with closely-related members may find that one is unnecessary, choosing to manage the affairs of the LLC with less formality. Multiple member LLCs, however, may consider the agreement essential to the operation of the business. The managing member of the LLC will generally retain the original operating agreement with the remainder of the company’s documentation.

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