Every startup needs a business plan. A Limited Liability Company (LLC) is no different, and while it may seem daunting, all you need to know is a few fundamental rules to get your business up and running. Once you are sure that forming an LLC will be more convenient for you over Sole Proprietorship or S Corporation, you can begin turning your dreams into a reality. On that note, here are the four most important steps to take when forming an LLC.
- Choose a Name and State
The first crucial step is to, of course, select a name for your business. You may want to run it through a business name generator so that it’s like no other. Moreover, consider the state in which your business resides as there may be specific naming guidelines – it’s best to give your business the location of your residence, especially if you will be opening an office, store, or any other type of physical presence. Furthermore, your business must include Limited Liability Company or its abbreviation LLC in its name. Invariably, check the general naming guidelines before making any decisions.
- Find a Registered Agent and File Your Formation Documents
There will be quite a bit of legal work to get done, which is why you must choose a registered agent to handle your company’s legal papers. Moreover, the folks at Quick Fever state that there are apps that can help make this process easier, so it’s not as complicated as it used to be in the past. Still, you should know that legal summons, state filing notices, among other official correspondence, will be sent and received through the registered agent you have nominated. Furthermore, you’ll then need to file for certification of formation, also known as your LLC articles of organization. Filing with your state’s business division makes your company legitimate and official.
- Structure LLC Operating Agreement
Create an LLC operating agreement that outlines owner and member roles in the company. This isn’t mandatory, but it’s better to have one to avoid complications down the road. Getting everything organized from the get-go will save you a lot of hassles. This operating agreement must consist of clear roles in the organization, management responsibilities, capital contributions, distributions, and voting agreements, membership changes and arrangements, and the LLC’s dissolution.
Some comprehensive online guides help you understand exactly how to create this structure. Following a guide will avoid any confusion. You’ll find valuable advice if you take a look at how ZenBusiness outlines how to form an LLC, and you’ll have a clear view of how easy it is with the right guidance. This will be very beneficial as it reduces any extra work on your part, giving you an outline you can adopt as your own.
- Get Your Employer Identification Number
An EIN is basically a business’ social security number. You can get one for free from the IRS through the website or via mail. This is necessary to hire employees and open a company bank account. Moreover, the IRS states that you need to get this step done before marketing your brand or selling products.
A Limited Liability Company already resolves many issues you may come across when hoping to start your own business. Contrary to popular belief, it isn’t a hassle to get your company off the ground. As mentioned above, the four steps are all you need to ensure your company is credible, and you’ll have a clear outline of the business’ structure.