Choose an LLC Name
To start an LLC, first choose a name for your LLC. Generally, states do not allow two different LLC companies to have the same name, or a very similar one. This means, for example, that if there is a Kay’s Cookies, LLC in San Francisco, there can’t be a Kay’s Cookies, Inc. in Los Angeles. There are also restricted words, such as “bank” and “insurance.”
It is possible to search existing business names using a state’s online database. This will help determine whether a prospective name is available for use. It is important to always check the availability of a name prior to filing LLC paperwork, or the application could be rejected.
It would also be a good idea to see if any local businesses have a similar name to one’s own business. Choosing a unique name is important for one’s business because it can help avoid confusion or trademark infringement lawsuits.
Once a business owner has selected a unique and available name, it would be wise to buy a domain name that matches the business.
Reserve LLC Name
The second step to starting an LLC is reserving a company name which creates your intention of using the LLC name and prevents others from using it. A business owner might know an LLC name but is still waiting to be ready to file the LLC documents. It is still possible for them to reserve the name for later use so that no one else can take it. Almost every state will allow a business owner to reserve a name by filing the relevant form and paying a name reservation fee. The reservation period length and fee amount will vary based on the state.
Select a Registered Agent for Service of Process
As part of starting an LLC, almost every state requires you to designate a registered agent. A registered agent is a person or entity you have appointed to handle necessary government, tax and legal correspondence about your business. A registered agent is an individual who agrees to receive legal materials on behalf of the LLC and transfer them to the relevant person at the company. These legal materials might be lawsuits, subpoenas, or other official legal or government documents. Typically, a registered agent can be anyone over the age of 18. Some companies offer registered agent services for a price.
Create an LLC Operating Agreement
An LLC’s operating agreement is a document that outlines the business’ financial and functional decisions, including rules, regulations and provisions. The purpose of the LLC Operating Agreement is to govern the business’s internal operations in a way that suits the specific needs of the business owners. The form includes descriptions of ownership interests, voting procedures, allocations of profits and losses, meeting procedures, operational plans, the rights of members, and a method for potential dissolution.
Usually, the operating agreement is not filed with the state and may not even be legally required. That said, it is still a helpful method by which businesses can define responsibilities and rights.
While each state has its own forms and procedures for creating an LLC, in general it is necessary to file articles of organization. This document includes the following information:
- The LLC’s name and address
- The term of its existence, if not indefinite
- The registered agent’s name and address
- The purpose the LLC was formed
The owner of the LLC must sign the paperwork and, in some states, so must the registered agent. It is necessary to file the LLC organizational documents with the relevant secretary of state in most cases. But there are some states that have a different department that deals with these filings. There is a fee for filing this document, though it varies from state to state.
Get an LLC Certificate
Once the LLC’s articles of organization are filed and approved by the state, the state will issue a certificate that formally acknowledges the LLC’s existence. In most states, an LLC Certificate of Organization is a legal certificate from the Secretary of State showing that your LLC was formed. This means your LLC will be authorized to conduct business. After receiving this certificate, a business owner can get a tax ID number and business licenses or permits. They may also set up a business bank account.
Register your LLC With Other States
If the LLC plans to do business in more than one state, then it may be necessary to register to conduct business in other states. In order to register, the owner of the business will need to complete and submit paperwork that is similar in nature to the initial articles filed when forming the LLC. For each state the LLC does business in, a separate registered agent is required.
While LLCs are a popular option for business owners and are relatively easy to create, it is essential to fill out the necessary paperwork and have a plan for operation.