How to Start an LLC


You have to start somewhere to make your business vision a reality. Putting the horse before the cart is an apt metaphor for aspiring entrepreneurs that want to make it on their own. The first and perhaps most important decision when starting a business involves selecting a structure. Find out how to start an LLC.

There are many options when it comes to choosing a business structure, but this option offers you the combination of flexibility, low taxes, and the legal right to protect personal assets - a Limited Liability Company (LLC).

Steps for Starting an LLC

Choose the State

The first item on your LLC formation to-do list is to select the state where you want to form your LLC. If your business caters to customers that live in the same state where you plan to conduct business, then forming a domestic LLC is the way to go. With online sales becoming a revenue producer for businesses across the industry spectrum, you should consider registering your LLC in a state such as Wyoming, which will essentially make your company “location independent.”

Pick a Name

Every state has established different rules for picking business names. However, you can expect to refer to the following general guidelines.

  • The name must include LLC or Limited Liability Company
  • The name cannot be an acronym similar to the one used by a government agency (FBI, EPA, SSA)
  • Using popular words like bank, lawyer, or university might require more paperwork, as well as the inclusion of a licensed professional to become part of your LLC

Develop an Operating Agreement

As one of the most important legal documents required to start an LLC, an operating agreement highlights the structure of your LLC and the roles each member plays in running your business. Most LLC operating agreements include the same sections.

  • Operating structure
  • Management roles
  • Voting procedure
  • Financial support obligations for each member
  • How to distribute profits and absorb losses
  • The dissolution process

Hire a Registered Agent

As a professional who receives legal documents on your behalf, a registered agent ensures that you file the proper paperwork before deadlines. All states require an LLC to designate a registered agent, and the agent hired must live in the same state as the LLC.

File Documents

The articles of organization create your LLC. Most states use this term, although your state might go with a certificate of formation or certificate of organization.

You can expect to file the following information:

  • Business name
  • Names and contact information of every founding member
  • The primary address of your LLC
  • Amount of time company has operated as a business
  • Contact information for the registered agent
  • LLC mission statement and explanation of purpose

Acquire an Employee Identification Number

An Employee Identification Number (EIN) is like a Social Security number for your LLC. You must have an EIN to hire employees and open various business accounts. The IRS provides an easy way to obtain an EIN that does not cost you any money.

File in Other States

If you want to conduct business in another state, you should qualify your LLC to operate there. This is often called “foreign qualification.”

The key phrase here is “conduct business.” Do you have a physical presence in a particular state, such as an office, restaurant, or retail store? Do you have employees that work in the state?

Filing in other states makes sense for franchised LLCs, but you have to follow the unique rules and understand the requirements for forming an LLC in each state.

Learn more about how to start an LLC by working with Cloud Peak Law Group. Contact us online today.

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