Whether you are a seasoned or a soon-to-be business owner, the term “Limited Liability Company” must have come across. At first glance, the process of making an LLC seems daunting. However, that is not the case.
There are 7 common steps when it comes to securing a legal identity for your business or company.
Before you begin, make sure you familiarize yourself with the benefits of LLC registration in the USA. If you’re unsure whether you need an LLC, reading about the advantages of LLC formation will help you.
7 Steps to Register LLC in the USA
Step 1: Decide a Name
A business is considered an extension of you, so the name must be chosen with care and consideration. Importantly, it should follow certain legal guidelines:
- Must include “Limited Liability Company” or an abbreviation (LLC, L.L.C.)
- Cannot resemble a government agency (e.g., FBI, Treasury)
- May require additional paperwork if it includes restricted words (e.g., Bank, Attorney)
Pro Tip: Consider securing a matching domain name for your website to ensure brand consistency.
Step 2: Choose Your State
You can choose to register your LLC in any state, but it’s typically best to do so in the state where you plan to conduct business. Registering locally can simplify compliance with state regulations and avoid additional fees for operating out of state.
Filing fees, annual report fees, and taxes vary by state. Compare these costs to determine the most economical option.
You can research on your own or book a consultation with a professional to guide you regarding the laws of the 50 US states.
Step 3: Appoint a Registered Agent
So far, the two steps you have learned can be done on your own. However, this is the part where you will require external support. A registered agent is a person or business entity responsible for receiving legal documents on behalf of your LLC.
Important: Make sure your registered agent is a resident of the state where you are forming your LLC or a corporation authorized to do business in that state.
Do you have questions regarding this step? Scroll down to check the FAQ.
Step 4: File the Articles of Organization
The Articles of Organization, also known as a Certificate of Formation or Certificate of Organization in some states, is a document that officially establishes your LLC. You will need to file this with your state’s Secretary of State office.
Filing fees vary by state, ranging from $50 to $800. Once you get approval, your business becomes a legal entity.
Step 5: Create an Operating Agreement
While most states don’t require an Operating Agreement, it is highly recommended to create one.
An Operating Agreement outlines the ownership and operating procedures of the LLC, which comes in handy in case of internal conflicts between partners. When the roles and responsibilities of all members are clearly defined, the chances of disputes decrease considerably.
- Obtain an EIN
An Employer Identification Number (EIN), also known as a Federal Tax Identification Number, is required for tax purposes. Think of it like the Social Security number for your business.
Learn more about the benefits of this 9-digit number here.
You can obtain an EIN for free from the IRS, either online or by mail.
Step 7: Comply with State and Federal Regulations
You’re almost there. The last step is to go through your chosen state’s tax or federal regulations. Depending on your business type and location, you may need to obtain additional licenses and permits. These could include business licenses, zoning permits, health department permits, and more. Check with your state and local government offices to ensure you’re fully compliant.
And that’s all. You have registered your business as a legal entity in the US.
Q: Can I Act as My Registered Agent?
A: Yes, you can act as your registered agent. However, you must be available during standard business hours to receive legal documents, which may not be practical for all business owners. State laws also vary, so make sure you conduct research.
Q: Why do I Need a Professional Registered Agent?
A: A professional registered agent service can ensure you never miss important documents and provide privacy by using their address instead of yours. This is especially useful if you work from home or frequently travel.
Q: What are the Key Elements of an Operating Agreement?
A: Generally, an operating agreement clarifies ownership interests, profit and loss distribution, management and voting rights, rules for meetings and decision-making, procedures for adding or removing members and finally, the dissolution process.
Q: What Information do I Need for the Articles of Organization?
The information required typically includes:
- Your LLC name and address.
- Registered agent’s name and address.
- Purpose of the LLC.
- Your business’s management structure.
- The duration of your LLC.
Q: How Long Does it Take to Receive an EIN for My LLC?
A: Business owners generally receive their EIN within 4 business days if they apply online. The process is quick and straightforward, allowing you to obtain this essential number for tax purposes, open a business bank account, and hire employees in a timely manner.
