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How to Form an LLC

limited liability company

When you set up a business, you might have considered forming a limited liability company, also known as LLC. 


What’s an LLC?

It’s a form of a commercial entity comparable to a corporation. The same as a corporation, the LLC gives personal liability security to its proprietors, identified as “members.” However, the LLC is much more versatile.
Here’s a step-by-step manual on how to form an LLC


Step #1 Choose Your State

For many new company owners, the perfect approach on how to form an LLC is to set it up in the state in which you live and where you intend to run your enterprise. If your company involves physical operations (stores, headquarters, marketing representatives, etc.) in various states, register a foreign LLC in each state where you will conduct business. There are often advantages to establishing an LLC in a state that has corporate-friendly legislation, like Delaware or Nevada. 


Step #2 Choose a Name

Even though prerequisites vary by state, the general principle is that your LLC title can never have the same name as another commercial entity licensed in the state. Many states often limit the use of specific terms, including “bank” in a business title. Some states also require you to use the title “LLC” or “limited liability company” at the end of the business name. You can review the business naming regulations of your state by checking the page of the government agency concerned for business applications. 


Step #3 Choose a Registered Agent

Once you build an LLC, select a registered agent, also identified as a statutory agent. They will receive legal complaints and formal records on behalf of your LLC. Every state has its registered agent criteria. However, the agent may be an individual at least 18 years of age or a commercial entity providing registered agent services.


Step #4 Fill Out the LLC Articles of Organization Form

It’s a straightforward method because the only things you have to do is to declare your LLC information.
  • Name
  • Enterprise purposes
  • Primary office address
  • Registered agent
  • Initial members
You do not have to indicate the individual property distribution or hierarchical structure, only the names of the members of the LLC. 


Step #5 Create an LLC Operating Agreement

The LLC operating agreement is a legal contract outlining the ownership framework and member responsibilities of your newly registered LLC. While most states may not expressly require you to have an operating agreement to establish an LLC, it’s still a solid concept to have one. 

There are six main components of an operating agreement:

  • Organization
  • Administration and Electoral Process
  • Financing Contributions
  • Membership Change
  • Dissolution 


Step #6 Publish a Notice

Several states have an obligatory requirement: you have to publish a short press notice of your intent to create an LLC. This statement must be released multiple occasions over weeks. Then, you will also have to send an affidavit to the state filing agency. You can pay the fees to the publisher or the state.

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