How Do You Form An LLC?
Forming an LLC is accomplished by filing Articles of Organization with your secretary of state.
Gather information to file articles of organization
- Check availability of your desired business name. Your name must be distinguishable from all other registered businesses in your state. Many states require a corporate suffix such as “Limited”, “Company”, or an abbreviation of one of these words. Conduct a name availability search or obtain a name reservation from your state.
- Identify the individual or company to serve as the LLC’s registered agent. This individual or company is responsible for receiving notice of lawsuit and other legal service for the business.
File articles of organization
File your Articles of Organization. This document is sometimes called Articles of Formation or Certificate of Formation. File this documents with the appropriate state agency - usually the secretary or department of state. Approval finalizes your business’s name and creates the legal entity of the LLC.
- Create your Operating Agreement which is the governing document for the LLC. This document defines how the LLC will run itself.
- Hold the first meeting of the members. At this organizational meeting, the LLC approves initial resolutions such as opening a company bank account and check signing. Keep minutes of this meeting.
- Office supplies intended for an LLC are a great way stay organized and save time. These often include a company record book, seal, and document templates. If your LLC documents ownership in membership certificates, issue these to the owners.
Register for federal and state taxes
Your LLC must obtain tax identification numbers.
- Obtain a Federal Tax ID for your LLC by filing Form SS-4 with the IRS.
- Register for state business taxes with the department of revenue in each state where your LLC conducts business. You likely need to register in the state if your LLC has an office, has employees, collects sales tax, or has other state tax obligations.
- Employer-owners with significant profits often save on self-employment taxes by electing S-Corp tax treatment for their LLC.
Other government registrations
Other government registrations for your LLC may be required. For example:
- Some states require your LLC to file an “initial report” with the Secretary of State after LLC formation. (Many states require an annual, biennial, or decennial report thereafter.)
- Some states require your LLC to publish its formation in legal journals or newspapers of general circulation. Publisher fees may run several hundred dollars so this cost should be calculated and considered before starting the LLC formation process.
- Some states impose a franchise tax for the privilege of doing business in the state. For example, a California LLC must pay an annual minimum franchise tax of $800.
- You are responsible for obtaining applicable business licenses and permits. Professional LLCs are a special type of LLC that often have special name restrictions and compliance with board guidance on LLC formation.
- Consider registrations for restricted business activities. Consider both federal restrictions (such as those creating an excise tax obligation) as well as state-restricted activities such as selling cigarettes, gambling, and selling alcohol.