Starting a business is no easy task. However, with the right procedure and adherence to rules and regulations, anyone can start a successful LLC and steer it to great heights. Below are five of the essential things you ought to understand about creating an LLC.
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- Choose the Location You Want to Set the LLC in.
Before you even get into the details of how to register a company as LLC, you first want to establish its location. It means that you need to look at the state regulations regarding said LLC. Different states have varied requirements and laws governing the establishment and running of LLCs. Find out how developed the laws in your state of interest are, ensuring that the LLC forms in the state where the business will be running.
Doing this will save you the unnecessary extra expenses you may incur in terms of complexities and fees charged. In case the LLC is a multi-state operator, ensure that its registration happens in all the states it runs its business in. You may end up filing a notice with each secretary of state and paying for the required fees. Once done, you can then operate your business freely without worrying about the legal consequences that may result.
- Find a Suitable Name for the LLC.
Once you are sure about its location, the next move is to develop the right name for it. First, pick an available name, making sure to carry out your search correctly. There are several things you may have to consider when selecting an LLC name, including the following:
- The company name must end with LLC(Limited Liability Company) or equivalent abbreviations.
- Ensure that the name is distinct from all active LLCs in the state record. It would help if you searched first before settling on a name lest it fails towards the end.
- Be sure that the name does not contain prohibited terms like those of insurance and banks.
- The name you choose must not have the word corporation or any abbreviations denoting the same.
- Carry out a trademark search to ensure that you are within the stipulated guidelines and that you are not in violation of the other party’s trademark.
- Conducting an extensive internet search is advisable since the last thing you want is to get into trouble with lawsuits from owners of the name you chose. Also, consider the domain’s availability.
Note that the process of selecting an LLC and domain name is not easy. You have to involve paying a third party player for their services, especially if you want to have a good domain name.
- Filing the LLC Letters of Organization.
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Your LLC becomes officially formed only when you file the letters of organization with the secretary of state. Regardless of how other states refer to this document, it implies the same thing. There are a few factors worth noting when creating the letters of organization. It has to be short and very easy to complete.
It would help if you also designated a registered agent to be the recipient of all legal documents, anything from subpoenas to complaints. Depending on the state you are in, you may have to pay a minimum annual tax in addition to the typical filing fee that all states require. Besides that, you also have to include the purpose of the LLC. In some cases, individual states will require that you check a box indicating that the LLC’s management will be under one manager or several managers.
- LLC Operating Agreement
The document specifies the LLC’s members’ roles. It covers management, financial, and other relevant responsibilities. The details of this document capture the following:
- Specific amounts each member contributes, and the time the contribution is made.
- Penalties and remedies attached to contribution defaulting and failure
- Split and distribution of profits and losses among members and owners
- The LLC management details
- Number of appointed officers
- Specification of voting rights on main events such as capital contributions or business sales
- Compensation against losses for managers in charge of the daily running of the business
- LLC interest/units transfer restrictions
- Member meetings procedures
- Dissolution procedures
- Sort the Licenses, Bank Account Details, and Employer Details.
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There is still so much you can do before the LLC is up and running. However, besides what you already know from the above discussion, consider getting your business’s proper licenses. These licenses will be local, federal, and state licenses depending on the business you are currently running. In addition to that, you also have to get an official bank account for the company.
The business will only operate with an authorized bank account number, making it easy for you to capitalize on all the funds coming in, allowing you to run the business sufficiently. When the LLC is independent, it is possible to have an objective approach when dealing with business operations. In the end, get the employer identification number.
Some states refer to it as the federal tax identification number. All LLCs need to have it, especially if they intend to open a business account since most banks require it as a mandatory document.
Setting up an LLC may not be the easiest thing one does, but it is also not difficult. Business owners should know what is required and stick to them. In the end, a correctly set up business has a higher success chance than one operating blindly.