5 Essentials Steps for Starting an LLC
One of the best ways to protect yourself from costly litigation and hefty taxes is by setting up your business as a limited liability company, or LLC. Forming an LLC also allows you to share profits between owners in an intuitive manner without investing an immense amount of time into paperwork and other administrative duties. You must go through the process of creating an LLC by following the correct steps in the proper order. Here are the five main steps you will need to complete to create a LLC from scratch.
Create an Ideal Business Name
You cannot even start to set up your company until you create an ideal business name. Since you cannot change the name in the future without essentially starting over, think heavily about names that reflect your company's overall mission. Make sure to consider all double meanings and deeper connotations while choosing between the best names in the list. Also, you must ensure the company name is completely unique and not too similar to other entities, especially in the same industry.
Secure a Suitable Business License
Once you come up with your company name, you can fill out the forms to secure a business license in your state. The business license application can be filled out and turned in at your state's main labor offices. In many states, you can also apply for a business license by using a secure online portal. Your license application will take up to two weeks to process. You should receive your official license in the mail soon after that.
Write Up a Member Agreement
Even if your state doesn't require a member agreement, it's important to write one up before starting your operations. The detailed agreement should spell out the way you will operate your business, so you do not have to refer to state laws that come into effect in the absence of clear company rules. The member agreement also protects you from litigation attempts in the future by confirming your LLC status.
Fill Out LLC Application Paperwork
Once you have your business license and member agreement in hand, go ahead and fill out the LLC application paperwork, or articles of organization. You will need to include the member names, headquarters address and business name on the application. Double check the paperwork to make sure you checked the right boxes and provided all of the requested information before submitting it for review.
Pay the Filing Fee and Submit
The state you chose for your headquarters determines the total filing fee for the articles of organization. The filing fee often ranges from $100 to $1000, depending on the state tax and business laws. You can talk to your tax preparer, such as The Income Tax Center in St. Louis, Missouri, if you want to find out the total required fee amount before you file or need to inquire about tax preparation.
Once you file your paperwork, you can begin operating your company as an LLC. Before you open your doors, verify that you have all of the required permits and licenses in your state to avoid fines and other repercussions.