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.

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.

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.

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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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The Meaning of DBA

DBA is an abbreviation for the term “doing business as,” and it refers to the name that a business uses. For example, if Joe Gomes wants to name his plumbing business "Speedy Plumbing," that name would be his DBA. Other terms for DBA include "fictitious name," "assumed name," and "trade name." Laws vary among jurisdictions, and you must learn the laws in your area. In general, the goals of DBA laws are to reduce confusion and increase transparency about the purposes and ownership of businesses.

What Does a Limited Liability Company Mean?

A limited liability company, or LLC, is a hybrid business form created by state statute. The LLC combines the corporate feature of limited liability with the flexibility and tax status of a traditional partnership. It is the preferred business form for small business owners who do not intend their business to grow significantly, according to "Entrepreneur" magazine. “Limited liability” means that the LLC’s members do not have personal liability for business decisions or activity conducted on behalf of the LLC.

Can an LLC Transfer to Another State?

One of the major benefits to forming a limited liability company, or LLC, is the flexibility afforded to LLC owners to structure their LLC in the manner they see fit. If an LLC organized in one state needs to move to another state, typically either due to growth or the owners' relocation, it needs to go through a process called domestication.

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