Simple Steps in Starting a Limited Liability Company (LLC)
A limited Liability Company or LLC is a combination of a corporation and a partnership. Like a corporation, members are protected from suffering business losses and debts. Taxation is unlike that of a corporation however. A corporation is under typical tax laws. An LLC is like a partnership when it comes to taxes. The profits and losses from the LLC are reported on the owners' tax returns. Setting up an LLC might be more complicated than the processes involved with establishing sole proprietorships or partnerships but running one is certainly less work compared to managing a corporation. It is not as hard to form an LLC as most people think.
There are 5 simple steps to take to form an LLC.
1. Choosing a name for the LLC
-- The name of the LLC must not be already in use by an existing company or entity.
-- At the end of the name it should be indicated that the company is an LLC or limited Liability Company
-- The name cannot contain words prohibited by state rules. Words such as €banks€ and €insurance€ for example.
2. File official paperwork, also called articles of organization (certificate of formation or certificate of organization in some states)and pay all the required fees
-- This is done in the state's LLC filing office.
-- Fees usually range around $100 but some states charge yearly taxes aside from the filing fees which may cost up to $800.
-- All required information should be provided including the contact information of a €registered agent€ that represents the LLC. The registered agent is chosen from the members.
3. Draft a company operating agreement. A standard operating agreement should include the following:
-- Each member's stake in the company
-- The rights and responsibilities of each member
-- The weight of each member's vote
-- Distribution of profits and losses
-- The management of the company
-- Guidelines for meetings and voting
-- Interest trading provisions
4. Publishing a note of intent
-- This is required only in some states.
-- A note should be published in a public medium (usually the local paper) stating the intent to form an LLC.
-- An affidavit of publication is then submitted to the LLC filing office. Some states may require the publication to continue for several weeks.
5. Securing the necessary licenses and permits needed for the business
-- After making the LLC official, licenses and permits required to operate a business will still be needed.
-- These will include a business license, a federal employer identification number and a zoning permit.
It is quite simple to form an LLC and it is even easier to dissolve one. An LLC ends when a member leaves. This is the case in most states. There can be exceptions to this depending on the conditions set in the company operating agreement.
A limited Liability Company can be administrated jointly by all of its members. This management method is more commonly known as €member management€. Another method of administration is the €manager management€. In the manager management arrangement, the LLC is administrated by the chosen managers. The managers can be chosen from among the members or they can be from outside the company. In this type of management scheme, the non managing members just wait for profits to flow. Choosing to go with the manager management option will need some clearances and clarifications from the state and federal regulations on the sale of securities.
There are 5 simple steps to take to form an LLC.
1. Choosing a name for the LLC
-- The name of the LLC must not be already in use by an existing company or entity.
-- At the end of the name it should be indicated that the company is an LLC or limited Liability Company
-- The name cannot contain words prohibited by state rules. Words such as €banks€ and €insurance€ for example.
2. File official paperwork, also called articles of organization (certificate of formation or certificate of organization in some states)and pay all the required fees
-- This is done in the state's LLC filing office.
-- Fees usually range around $100 but some states charge yearly taxes aside from the filing fees which may cost up to $800.
-- All required information should be provided including the contact information of a €registered agent€ that represents the LLC. The registered agent is chosen from the members.
3. Draft a company operating agreement. A standard operating agreement should include the following:
-- Each member's stake in the company
-- The rights and responsibilities of each member
-- The weight of each member's vote
-- Distribution of profits and losses
-- The management of the company
-- Guidelines for meetings and voting
-- Interest trading provisions
4. Publishing a note of intent
-- This is required only in some states.
-- A note should be published in a public medium (usually the local paper) stating the intent to form an LLC.
-- An affidavit of publication is then submitted to the LLC filing office. Some states may require the publication to continue for several weeks.
5. Securing the necessary licenses and permits needed for the business
-- After making the LLC official, licenses and permits required to operate a business will still be needed.
-- These will include a business license, a federal employer identification number and a zoning permit.
It is quite simple to form an LLC and it is even easier to dissolve one. An LLC ends when a member leaves. This is the case in most states. There can be exceptions to this depending on the conditions set in the company operating agreement.
A limited Liability Company can be administrated jointly by all of its members. This management method is more commonly known as €member management€. Another method of administration is the €manager management€. In the manager management arrangement, the LLC is administrated by the chosen managers. The managers can be chosen from among the members or they can be from outside the company. In this type of management scheme, the non managing members just wait for profits to flow. Choosing to go with the manager management option will need some clearances and clarifications from the state and federal regulations on the sale of securities.
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