Setting up an LLC: A Step-By-Step Guide
Kick-starting your new business and developing a strong foundation requires a multitude of steps–most of which can seem daunting. Legal steps, such as filing a Limited Liability Company (LLC), are thought of as overly-complicated and are avoided for as long as possible. However, creating an LLC for your new company brings with it many tax, legal, and credibility benefits that business owners should take advantage of as soon as possible.
If you’re interested in setting up an LLC but not sure where to start, here’s a simplified step-by-step guide for new and seasoned business owners alike.
Step 1: Develop a Name for your LLC
The first step to setting up an LLC is deciding on your business’ name. A company’s name is one of the most important traits to any business, so ensure your choice aligns with the services you provide, resonates with customers and translates to an effective—and available—website domain. Once you settle on your business’ name, you must add “Limited Liability Company,” “L.L.C” or “LLC” to it. Similar to ensuring your company website domain is available, you must also ensure your chosen LLC name is not already filed in your state.
Tip: Every state has its own set of prohibited words for LLC titles. Therefore, be sure your business’ name doesn’t include any of your state’s prohibited words.
Step 2: Draft and Submit Articles of Organization
Once you’ve selected your LLC name, it’s time to get to the inevitable paperwork involved in setting up an LLC. Articles of organization are sets of documents that must be filed with a state or local government agency before your company can be legally recognized. Components of these documents vary state-by-state, but all require the name and address of your LLC; a statement of purpose for your business; the name and address of your LLC registered agent—or the person who is authorized to physically accept delivery of legal documents on behalf of your LLC—and the names of all LLC managers.
Tip: Though most people can legally act as a registered agent, it may be best to consider hiring a company of specialists to fulfill this important role.
Step 3: Meet State Requirements
In order to ensure you’ve taken all of the necessary steps to register your LLC, it’s important to be aware of additional requirements specific to the state in which your business will operate. For example, New York and Arizona require that you publish a notice of intention in a local newspaper to form an LLC. Florida, Arizona and New Jersey do not allow articles of organization to be filed with the secretary of state, unlike most other states. And in New York, your registered agent is the secretary of state by default. You can only change it after your LLC is formed.
Tip: Seek the advice and input of experts when going through this process by taking advantage of small business departments and courses in your state.
The legal steps for starting your own business can seem daunting—that’s why it’s important for hopeful business owners to utilize tools and resources available to them to help streamline the process. When it comes to setting up an LLC, research is key. Though the general steps for filing your LLC will look similar for business owners nationwide, particular components of the process vary by location. Ensuring your application meets all requirements and includes all specified documentation will ensure your LLC is approved, allowing you to truly kick-start your new business.