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Steps To Start An LLC

LLC’s are said to be safe and flexible business options for the beginners in business. Small business owners go for LLCs as it encompasses less risks as compared to the SMB’s. The business owners are not held liable for any debits of the company and can chose their own management structure.

But what is an LLC?

An LLC, or a Limited Liable Company is a business structure from being personally liable for the company’s debts or any other liabilities. An LLC is a hybrid entity combining the benefits of partnership as well as sole proprietorship. It can be owned by a single person, or a group of people.

Overall, an LLC is a flexible business structure that protects the owner’s personal assets if the company is declared bankrupt.


Starting your business as an LLC includes some basic steps. Have a look at them below.

  1. Choose your Base Location: The first thing you need to think is, the state in which you are going to start your business. For most of the new businesses, starting the LLC in the state in which you are residing is the best option. This is important consideration as the physical location of your business needs to be registered.

LLC and business laws in some states are more favourable and flexible in some states than the other ones. It is thus important to choose the state in which you want to get your business started as an LLC.

  1. Give it a Name: Once you have decided the state in which you want to start a business, it is time that you choose a business name. The state in which your business is established might have a set of rules. For instance, the name must include the phrase, “Limited Liability Company”, or an abbreviation (L.L.C or LLC).

Or, the company name cannot have names that can confuse the business with a government agency, such as Treasury, CIA, or FBI.

  1. Involve a Registered Agent: The registered agent is a person or it can be any other business that is responsible for sending and receiving legal documents on your behalf. These papers comprises of legal summons or document filings that is received and forwarded by registered agent. Most states requires an LLC to use the registered agent and the agent is required to be the resident of the state in which the business is commenced.
  2. File with the State: The next step is to register your LLC with the state with the formation document referred as “article of organization, certificate of formation, or certificate of organization.” This document create your LLC with the help of your state filing fee. Along with the certificate, other things are also required including:
  • Name of the business
  • Full name and contact information of all the founding members of the LLC.
  • Length and time of the existence of the company.
  • Information of registered agent.
  • Address of the LLC
  • Information about LLC, including the purpose and mission statement.
  1. Determination of Management Structure: An an LLC, you have all the rights to choose the structure of the business management. You have all the rights to choose the number of members responsible for the day-to-day running of the company and managers.
  2. Create an LLC Operation Agreement: An LLC operation agreement is a document that outlines the role of the members and ownership structure of the complete LLC. The operation agreement involves some of the sections such as:
  • Organization: It outlines where and when the company was established, who are the members, and the ownership structure.
  • Capital Contribution: Here you will designate which member will financially support the LLC and how more funds will be raised.
  • Management and Voting: Here the company will address how it will manage and make decisions.
  • Distribution: This section will show how the profits and losses of the company are shared amongst the members.
  • Dissolution: Here the circumstances will be explained under which the company will be dissolved.
  1. Get Employer Identification Number (EIN): An EIN is a social security number for hiring the employees and opening a bank account for the business. You can get your EIN free from the IRS website or through mail or fax.

What to Do After Starting an LLC

  • Set up unemployment and tax insurance
  • Determine what and who will do your accounting
  • Settle on business insurance policies
  • Obtain the necessary permits
  • Double check the laws for hiring

LLC’s also enjoy tax benefits as the pass through taxation is a major benefit for them, the profits are taxed only once.

Source: Business News Daily

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