5 Steps You Need to Follow to Form a Limited Liability Company
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1. Determine which jurisdiction(s) to file in.
Generally, if a startup business wants to file to become an LLC, there are certain steps to follow. The first thing to do is to determine in which state the LLC will be filed. If the business will potentially operate in multiple states, there may be a requirement to file in all of those states. States will usually require your business to file as a foreign LLC if doing business out of the state. For instance, an LLC in Delaware with business being transacted in California would have to be registered as a foreign LLC in California, yet a filing fee would have to be paid in California as well.
2. Choose a name for the LLC.
The next order of business is to select an appropriate name for the LLC prior to filing. A fictitious name can be used instead of the actual LLC at the end of the company name. For instance, a company may do business as Revolution, but the name of the LLC would be Revolution Trade, LLC. Ensure that no one else has the company name so there are no trademark or copyright infringements. Bear in mind that the office of the Secretary of State will only have records within their respective state. So you might have to do some research before choosing the company’s name.
3. Designate a registered agent.
Next you'll need to choose someone to act as registered agent on the company’s behalf. The registered agent is the one responsible for the receipt of legal paperwork on behalf of the company. Therefore, business owners need to choose wisely. It would be impossible to serve legal paperwork directly to the LLC, since the LLC is not a physical entity, which is why it's necessary to identify your registered agent in the articles of organization. This choice can always be changed by filing a notice of change with the Secretary of State. The agent can be the business owner, a family member, a lawyer or a company that offers LLC filing services. For registered agents whose LLC’s have fallen into financial hardships, seeking the advice of a relief agency can be a solution to their problems.
4. Organize the LLC.
There are many companies that will organize your LLC for a fee, but you can do it yourself and save on the costs. Organizing an LLC involves filing with the correct state office, preparing an operating agreement and recording the minutes for the initial members meeting. Select the ownership structure at the beginning of the organization process. Do so even before filing the articles of organization.
5. File the paperwork.
Prepare the Articles of Organization and any other documents you need to file to create the LLC. You'll need to provide the following:
- The LLC’s chosen name.
- A statement detailing the purpose of the LLC.
- Name and address of the registered agent who will be receiving legal paperwork for the LLC.
- Some optional information including names of managers or preliminary members (don’t include these officers in the articles of organization unless it is a state requirement).
- The anticipated dissolution date or, alternatively, a statement that the LLC will have an unlimited term of existence.
- The required filing fees (each state is different).
Check the secretary of state’s website for your state to inquire about any other rules and regulations particular to the state of filing.