Do it Yourself LLC

By Harper Jones

A limited liability company, or LLC, is an organization run by a member or members. Unlike a corporation or partnership, members of an LLC have limited liability for the company's debts. An LLC can be created by filing a legal document, usually called Articles of Organization, with an appropriate state agency. Although it may sound simple to file one document, there are many legal intricacies of which you should be aware when endeavoring to start an LLC.

A limited liability company, or LLC, is an organization run by a member or members. Unlike a corporation or partnership, members of an LLC have limited liability for the company's debts. An LLC can be created by filing a legal document, usually called Articles of Organization, with an appropriate state agency. Although it may sound simple to file one document, there are many legal intricacies of which you should be aware when endeavoring to start an LLC.

Filing Articles

To become a legally recognized entity, every state requires that an LLC must file a document, usually called Articles of Organization, with an appropriate state government agency office. As of November 2010, filing fees range from $30 to 200, depending on the state, according to the "Wall Street Journal." Articles of Organization ask you to identify the name of the LLC, which must be original and unused in the state of incorporation. The Articles will also ask for the name of the agent, or a resident in the state of incorporation, who will receive all correspondence for the LLC. The agent need not be a member of the LLC.

Ready to start your LLC? Start an LLC Online Now

Beginning the Business

While most states do not require that LLCs have operating agreements, most LLCs create operating agreements anyway. An operating agreement is a legally binding document that establishes the business and financial responsibilities of each member of the LLC to other members and the LLC itself. If an LLC does not have an operating agreement, the LLC must defer to default state statutory laws. Many states have specific requirements should an operating agreement be created, such as the Arkansas law that requires this agreement to be in writing.

Taxes and the IRS

Every LLC must file for and receive an EIN, or employee identification number, from the Internal Revenue Service, or IRS. Without an EIN, it is impossible to open a bank account or hire legitimate employees. The employee identification number application is free, and the application process can be completed online (see Resources).

Documentation Upkeep

Most states do not require annual dues or documentation from LLCs, according to the "Wall Street Journal." Because of the less stringent paperwork requirements for LLCs, many LLCs are remiss in their documentation protocols. However, should an external audit occur, LLC status can be challenged if improper or incomplete paperwork and records are discovered.

Ready to start your LLC? Start an LLC Online Now
What Documents Do You Need for a Limited Liability Company?

References

Resources

Related articles

How to Organize a Limited Liability Company in Oklahoma

A limited liability company, or LLC, is an organization created by one or more entities to limit liability. This allows members to be jointly liable as a company for debts and obligations instead of individually. According to the Oklahoma Secretary of State, LLCs are the newest type of type of business structure in the state. Individuals seeking to create a LLC must follow proper statutory procedures and ample preparation.

Standard LLC Agreements

While limited liability companies, or LLCs, have some characteristics of corporations, one feature they do not share, thankfully, are the number of agreements, documents or legal requirements. Only two primary agreements are typically necessary to form an LLC. You'll need the articles of organization to file for state registration of your LLC. While not necessary to file for state recognition, an operating agreement is the second important document for proper LLC functioning.

Incorporating Vs. LLC

One of the most important initial decisions in starting a business involves deciding what type of business entity your new venture should be. Two options are corporations and limited liability companies, or LLCs. There are distinct advantages and disadvantages to each type with respect to personal control, taxation and personal liability.

LLCs, Corporations, Patents, Attorney Help

Related articles

LLC Filing Services

An LLC is an attractive business form -- as opposed to a partnership or corporation -- because members have limited ...

LLC Article Rules

Most jurisdictions throughout the nation adopt the legal principles of the Uniform Limited Liability Company Act ...

Regulations for Limited Liability Companies

Limited liability companies, or LLCs, are versatile business vehicles that were designed to take advantage of some of ...

Do LLCs Have to File Corporate Minutes?

Although S corporation, or S corps, provide the same limited liability protection and the same pass-through tax ...

Browse by category
Ready to Begin? GET STARTED