How to Start an LLC
Thinking about starting a business? Have you considered an LLC? A limited liability company—or LLC—is a great way to get your company going, while protecting yourself. Limited liability means that your business, and any debt it incurs, remains separate from your individual assets. LLCs also simplify taxes by passing all income directly to the owners, eliminating income tax at the company level. And they operate with a simpler structure, making them more flexible. Benefits like these may be exactly what your business needs.
The first step is to choose a name. Most states have rules about names, and you’ll want to be sure to choose one that no one else is using, so do your research.
- You’ll also need to designate a registered agent. This is someone who receives official legal and tax correspondence, and can be yourself—just know that whatever address you use will become public information, so you probably won’t want to use your home address.
- You’ll need to file the Articles of Organization with your state. This is sometimes called a Certificate of Formation and is the paperwork to actually create your LLC.
- An LLC operating agreement is also something most experts recommend, even if your state doesn’t require it. This is a legal document that lays out the operational procedures for things like financial contributions, profit distribution, and procedures if a member of the LLC decides to withdraw from the company.
- Be sure to follow all of the tax and regulatory requirements, including any necessary out of state registration. You’ll also want to see if your state has any specific requirements—for example, several states require you to post a notice in the local newspaper.
- Finally, you’ll need to follow your state’s guidelines for maintaining your LLC. For many, this is an annual report filed with the state office.
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