Business Beginner’s Guide to Creating an LLC

Business Beginner’s Guide to Creating an LLC

Did you know there are more than 25 million nonemployee businesses across the United States? That means more than 76% of American companies are owned and operated by individuals.

Whether they are freelancers, contractors, or consultants, it’s safe to say that entrepreneurs contribute a significant amount of revenue and profit to the economy.

If you have ever dreamt of joining this entrepreneur sector, you may need to learn how to create an LLC. In fact, for many sole business owners, this is the first and most crucial step toward legally operating a business.

Whether you are running your business online or in a traditional office space, an helps legitimize your enterprise, account for tax purposes, and register your company with the government in the designated jurisdiction.

If you feel overwhelmed about the LLC creation process, don’t worry! Read on to learn more about forming an LLC and launching your business.

What Is an LLC?

An LLC is a Limited Liability Company. Many entrepreneurs choose to incorporate their companies as LLC because this type of formation allows the separation of the business from an owner’s assets. This is especially important in the case of legal action against your company.

With an LLC formation, you can protect your personal assets like your home, cars, and other tangible property. An LLC allows you to register, own, and operate your company. LLCs can be formed with a sole owner or include partners.

How Much Does It Cost To Create an LLC?

As a new business, an LLC may be especially appealing because it is relatively inexpensive to form and renew. The exact cost of incorporating your company depends on your state jurisdiction and related fees.

But for a general rule of thumb, expect to spend a few hundred dollars to create the company and renew your LLC year after year. You can find more information about LLC formation services and the related fees.

LLC Requirements

Regardless of which state you reside in and choose to operate your business, they are specific LLC requirements you need to know about. These are some general LLC requirements to prepare:

• Business name
• Owner or partner names
• Registered agent
• Operating agreement
• Licenses or permits
• Statement forms
• Tax forms

But, remember to check the IRS requirements per state. These items may vary according to different jurisdictions and are subject to change according to your business type.

Let’s review the requirements above and apply them to the LLC formation process. Your LLC formation and related articles may be affected by your state jurisdiction, your type of business, and potential business partners.

Business Name

To incorporate your LLC, you need to choose a business name. This is an important step that requires research, thought, and attention to detail. Changing your LLC business name can be a difficult and sometimes impossible task.

So, you must file correctly. Do your due diligence to ensure there are no other businesses that share your name. Check that your preferred business name isn’t similar to other companies or could create consumer confusion.

This will prevent legal hassle and potential fees down the line. If you plan to choose a name for your LLC but do business under a different name, you may need to follow a DBA (doing business as).

Registered Agent

You need to assign a registered agent as a part of the formation. The registered agent is the person responsible for the LLC and business entity in the case of a lawsuit or legal issue. You can assign yourself as the registered agent if you are willing to undertake this responsibility.

Note that in some states, the legislation requires the registered agent to reside in the state. Some business owners may choose their attorney or another staff member to handle this role.

Owner or Partner Names

Who will form your LLC? Are you the sole owner? Are you a joint venture?

Will you have business partners? These are special considerations to think about at this stage. Include any owner names in the LLC formation.

Operating Agreement

Create an operating agreement to outline how your company will be run and who will manage operations. While not all states require an operating agreement, this is a helpful document to organize the business.

Licenses or Permits

Depending on your type of business, you may be required to apply for and attain special licenses or permits. For example, cosmetology businesses require specific licenses. Or, boutiques or stores may require a resale license.

Statement Forms

A statement form is a short document that verifies your business’ LLC information is on file in your state jurisdiction. The statement form also shows that your business dealings are up to date.

Tax Forms

Part of owning a business involves complying with local and state tax laws. An formation requires you to request your own EIN (Employee Identification Number).

You may also need additional to register additional tax forms for sales or employees, depending on the scope of your business.

Follow These Steps to Learn How to Create an LLC with Ease

If you’ve ever asked yourself how to create an LLC online, these steps can help set up your business for success.

Remember that forming an LLC the correct way is dependent on your type of business and your state jurisdiction. Each company may present additions or unique challenges to forming an LLC.

If you have questions or doubts, it is crucial to seek professional formation services. While it presents an upfront cost, this could save you the hassle and expense of legal fees later on.

Did you find this information helpful? Then, check out our other business stories.

Did you know there are more than 25 million nonemployee businesses across the United States? That means more than 76% of American companies are owned and operated by individuals.

Whether they are freelancers, contractors, or consultants, it’s safe to say that entrepreneurs contribute a significant amount of revenue and profit to the economy.

If you have ever dreamt of joining this entrepreneur sector, you may need to learn how to create an LLC. In fact, for many sole business owners, this is the first and most crucial step toward legally operating a business.

Whether you are running your business online or in a traditional office space, an LLC helps legitimize your enterprise, account for tax purposes, and register your company with the government in the designated jurisdiction.

If you feel overwhelmed about the LLC creation process, don’t worry! Read on to learn more about forming an LLC and launching your business.

What Is an LLC?

An LLC is a Limited Liability Company. Many entrepreneurs choose to incorporate their companies as LLC because this type of formation allows the separation of the business from an owner’s assets. This is especially important in the case of legal action against your company.

With an LLC formation, you can protect your personal assets like your home, cars, and other tangible property. An LLC allows you to register, own, and operate your company. LLCs can be formed with a sole owner or include partners.

How Much Does It Cost To Create an LLC?

As a new business, an LLC may be especially appealing because it is relatively inexpensive to form and renew. The exact cost of incorporating your company depends on your state jurisdiction and related fees.

But for a general rule of thumb, expect to spend a few hundred dollars to create the company and renew your LLC year after year. You can find more information about LLC formation services and the related fees.

LLC Requirements

Regardless of which state you reside in and choose to operate your business, they are specific LLC requirements you need to know about. These are some general LLC requirements to prepare:

• Business name
• Owner or partner names
• Registered agent
• Operating agreement
• Licenses or permits
• Statement forms
• Tax forms

But, remember to check the IRS requirements per state. These items may vary according to different jurisdictions and are subject to change according to your business type.

Let’s review the LLC requirements above and apply them to the LLC formation process. Your LLC formation and related articles may be affected by your state jurisdiction, your type of business, and potential business partners.

Business Name

To incorporate your LLC, you need to choose a business name. This is an important step that requires research, thought, and attention to detail. Changing your LLC business name can be a difficult and sometimes impossible task.

So, you must file correctly. Do your due diligence to ensure there are no other businesses that share your name. Check that your preferred business name isn’t similar to other companies or could create consumer confusion.

This will prevent legal hassle and potential fees down the line. If you plan to choose a name for your LLC but do business under a different name, you may need to follow a DBA (doing business as).

Registered Agent

You need to assign a registered agent as a part of the LLC formation. The registered agent is the person responsible for the LLC and business entity in the case of a lawsuit or legal issue. You can assign yourself as the registered agent if you are willing to undertake this responsibility.

Note that in some states, the legislation requires the registered agent to reside in the state. Some business owners may choose their attorney or another staff member to handle this role.

Owner or Partner Names

Who will form your LLC? Are you the sole owner? Are you a joint venture?

Will you have business partners? These are special considerations to think about at this stage. Include any owner names in the LLC formation.

Operating Agreement

Create an operating agreement to outline how your company will be run and who will manage operations. While not all states require an operating agreement, this is a helpful document to organize the business.

Licenses or Permits

Depending on your type of business, you may be required to apply for and attain special licenses or permits. For example, cosmetology businesses require specific licenses. Or, boutiques or stores may require a resale license.

Statement Forms

A statement form is a short document that verifies your business’ LLC information is on file in your state jurisdiction. The statement form also shows that your business dealings are up to date.

Tax Forms

Part of owning a business involves complying with local and state tax laws. An LLC formation requires you to request your own EIN (Employee Identification Number).

You may also need additional to register additional tax forms for sales or employees, depending on the scope of your business.

Follow These Steps to Learn How to Create an LLC with Ease

If you’ve ever asked yourself how to create an LLC online, these steps can help set up your business for success.

Remember that forming an LLC the correct way is dependent on your type of business and your state jurisdiction. Each company may present additions or unique challenges to forming an LLC.

If you have questions or doubts, it is crucial to seek professional LLC formation services. While it presents an upfront cost, this could save you the hassle and expense of legal fees later on.

Did you find this information helpful? Then, check out our other business stories.