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To form an LLC, one must: 1) choose an available business name that complies with state rules; 2) file articles of organization with the state and pay fees ranging from $100-800; and 3) create an operating agreement detailing ownership, management, and other rules. Additional steps may include publishing notice of intent to form an LLC or obtaining required business licenses. Forming an LLC establishes legal protections for owners while setting guidelines for operating and managing the business.

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95 views3 pages

Additional Materials and Readings

To form an LLC, one must: 1) choose an available business name that complies with state rules; 2) file articles of organization with the state and pay fees ranging from $100-800; and 3) create an operating agreement detailing ownership, management, and other rules. Additional steps may include publishing notice of intent to form an LLC or obtaining required business licenses. Forming an LLC establishes legal protections for owners while setting guidelines for operating and managing the business.

Uploaded by

qpjcvgb7ht
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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How to Form an LLC

Here's what you need to do to form a limited liability company.

Forming an LLC (limited liability company) is not as hard as most people think. Here are the
steps you need to take to make your LLC a legal reality.

1. Choose an available business name that complies with your state's LLC rules.
2. File formal paperwork, usually called articles of organization, and pay the filing fee
(ranging from about $100 to $800, depending on your state's rules).
3. Create an LLC operating agreement, which sets out the rights and responsibilities of the
LLC members.
4. Publish a notice of your intent to form an LLC (required in only a few states).
5. Obtain licenses and permits that may be required for your business.

To learn about the ins and outs of LLCs, including the advantages of forming one, see Nolo's
article on LLC Basics.

Choosing a Name for Your LLC

The name of your LLC must comply with the rules of your state's LLC division. (Typically, this
office is combined with the corporations division within the secretary of state's office.) While
requirements differ from state to state, generally:

 the name cannot be the same as the name of another LLC on file with the LLC office
 the name must end with an LLC designator, such as "Limited Liability Company" or
"Limited Company," or an abbreviation of one of these phrases (such as "LLC," "L.L.C.," or
"Ltd. Liability Co."), and
 the name cannot include certain words prohibited by the state, such as Bank, Insurance,
Corporation or City (state rules differ on which words are prohibited).

Your state's LLC office can tell you how to find out whether your proposed name is available for
your use. Often, for a small fee, you can reserve your LLC name for a short period of time until
you file your articles of organization.

Besides following your state's LLC naming rules, you must make sure your name won't violate
another company's trademark. For information on trademark law and general advice on picking a
successful business name, see the Business Name area of Nolo's website.

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Once you've found a legal and available name, you don't usually need to register it with your
state. When you file your articles of organization, your business name will be automatically
registered.

Filing Articles of Organization

After settling on a name, you must prepare and file "articles of organization" with your state's
LLC filing office. While most states use the term "articles of organization" to refer to the basic
document required to create an LLC, some states call it a "certificate of formation" or "certificate
of organization." (To learn about the specific requirements of forming an LLC in your state, see
Nolo's articles on Forming an LLC in Your State.)

Filing Fees

One disadvantage of forming an LLC instead of a partnership or a sole proprietorship is that


you'll have to pay a filing fee when you submit your articles of organization. In most states, the
fees are modest -- typically around $100. A few others take a bigger bite: California, for
example, charges an $800 annual tax on top of its filing fee.

Required Information

Articles of organization are short, simple documents. In fact, you can usually prepare your own
in just a few minutes by filling in the blanks and checking the boxes on a form provided by your
state's filing office. Typically, you must provide only your LLC's name, its address, and
sometimes the names of all of the owners -- called members. Generally, all of the LLC owners
may prepare and sign the articles, or they can appoint just one person to do so.

Registered Agent

You will probably also be required to list the name and address of a person -- usually one of the
LLC members -- who will act as your LLC's "registered agent," or "agent for service of process."
Your agent is the person designated to receive legal papers in any future lawsuit involving your
LLC.

Creating an LLC Operating Agreement

Even though operating agreements need not be filed with the LLC filing office and are rarely
required by state law, it is essential that you create one. In an LLC operating agreement, you set
out rules for the ownership and operation of the business (much like a partnership agreement or
corporate bylaws). A typical operating agreement includes:

 the members' percentage interests in the business


 the members' rights and responsibilities

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 the members' voting power
 how profits and losses will be allocated
 how the LLC will be managed
 rules for holding meetings and taking votes, and
 "buy-sell" provisions, which determine what happens if a member wants to sell his or her
interest, dies, or becomes disabled.

For more on LLC operating agreements, read Nolo's article The LLC Operating Agreement.

Publication Requirements

In a few states, you must take an additional step to make your company official: You must
publish a simple notice in a local newspaper, stating that you intend to form an LLC. You are
required to publish the notice several times over a period of weeks and then submit an "affidavit
of publication" to the LLC filing office. Your local newspaper should be able to help you with
this filing.

Licenses and Permits

After you've completed the steps described above, your LLC is official. But before you open
your doors for business, you need to obtain the licenses and permits that all new businesses must
have to operate. These may include a business license (sometimes also referred to as a "tax
registration certificate"), a federal employer identification number, a sellers' permit, or a zoning
permit.

For more on business licenses and permits, see the Licenses & Permits for Your Business area of
Nolo's website.

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