How to Start an LLC in Quick steps

Starting your own business can be exciting and rewarding, but it can also be overwhelming.

One of the first steps you’ll need to take is deciding what type of business entity you want to form.

A Limited Liability Company (LLC) is one of the most popular business structures because it offers personal liability protection and flexibility in management and taxation.

What is an LLC?

A limited liability company (LLC) is a type of business structure commonly used in the United States that provides its owners with limited liability in the event the business fails.

LLCs are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.

The LLC structure protects its owners from being personally pursued for repayment of the company’s debts or liabilities.

Why Form an LLC?

There are many reasons why someone might form an LLC.

One of the primary reasons small business owners and real estate investors choose to form an LLC is to protect their personal assets, such as their home, car or family savings.

An LLC provides that its members and managers can never be held personally liable for the financial losses of the business.

This means that if your LLC goes bankrupt or is sued, your personal assets will be protected.

Another advantage of forming an LLC is that it provides limited liability protection.

As an owner of an LLC, you have limited personal liability for the debts and actions of the company. This means that your personal assets are protected.

Types of LLCs To Consider

There are several types of LLCs, including single-member LLCs, member-managed LLCs, multiple-member LLCs, and manager-managed LLCs.

LLCs can also be categorized as family LLCs, holding company LLCs, real estate LLCs, professional limited liability companies (PLLCs), family limited partnerships, L3C companies, and series LLCs.

The type of LLC depends on factors such as ownership, management, and the needs of the members.

How Much Does an LLC Cost?

The cost of forming an LLC can vary depending on the state you are in and the types of services you need.

Typically, state fees for forming an LLC are between $50 and $800.

The main cost of forming an LLC is the fee to file your LLC’s articles of organization with the Secretary of State.

This fee ranges from $40-$500 depending on the state.

Other costs might include business licensing and permit fees, publication fees in Arizona, Nebraska, and New York, and optional LLC name reservation fees (required in Alabama).

Steps to Start an LLC

Step 1: Choose a name for your LLC

The name you choose must be unique and not already in use by another business in your state. You can check if your desired name is available by searching the Secretary of State’s website.

Step 2: Select a registered agent

A registered agent is a person or company that agrees to accept legal mail on behalf of your LLC. This person or company must have a physical address in the state where your LLC is formed.

Step 3: File organizational paperwork with the state

To form an LLC, you must file articles of organization with the Secretary of State’s office in the state where you want to form your LLC.

Step 4: Prepare LLC Articles of Organization Form

The articles of organization are a legal document that establishes your LLC as a legal entity. This document includes information such as the name of your LLC, its purpose, and the names of its members.

Step 5: Determine licenses required

Depending on your business type and location, you may need to obtain certain licenses and permits before you can legally operate your business.

Step 6: Get an EIN

An EIN (Employer Identification Number) is a unique nine-digit number assigned by the IRS to identify your business for tax purposes.

Step 7: You can optionally register to do business in other states

If you plan on doing business in other states, you may need to register your LLC as a foreign entity in those states.

Frequently Asked Questions (FAQs) about Starting an LLC

What is an LLC operating agreement?

An LLC operating agreement is a legal document that outlines the ownership and member duties of your LLC.

It also defines other structural features of your business such as guidelines for how certain key procedures will be handled.

The operating agreement usually includes basic information about your LLC and its owners (known as members), the company’s elected tax treatment and provisions for how profits and losses will be allocated among members.

How do I file taxes for an LLC?

The way you file taxes for your LLC depends on how your business is taxed.

An LLC can be taxed as a sole proprietorship, partnership, S corporation or C corporation.

If you choose to have your LLC file taxes as a corporation, you must tell the IRS by filing Form 8832: Entity Classification Election.

At tax time you’ll use Form 1120: Corporation Income Tax Return, or 1120S if you choose to be taxed as an S-corporation.

If your LLC is taxed as a sole proprietorship, you need to file Form 1040 (Individual tax return).

The deadline to file taxes is May 17.

Form 1040 should be filed with Schedule C, and it serves to pay federal income tax that covers all income, losses and annual expenses of a single-member LLC.

Do I need a registered agent for an LLC?

Yes, you are legally required to list a registered agent as part of your LLC or corporation.

A registered agent is a person or business designated to receive service of process and other official documents by mail or in-person on behalf of a company.

Each state requires that LLCs appoint a registered agent.

You’re responsible for keeping your registered agent information up to date with the state.

Is it possible to set up an LLC for free?

While the cost to register an LLC varies by state, there is a fee to register in every state.

So, while there are some companies that advertise “free” LLC registration, mandatory state filing fees must still be paid.

However, you can form an LLC yourself and save on the costs of having your LLC filed.

If you choose to take help of a trusted incorporation service, you’ll still need to pay your state filing fees.

What’s the difference between an LLC and a corporation?

The main difference between an LLC and a corporation is that an LLC is owned by one or more individuals, and a corporation is owned by its shareholders.

A corporation must have a formal structure run by a board of directors.

In contrast, an LLC has minimal legal formalities and lenient recordkeeping requirements.

Can an LLC be a nonprofit?

Yes, a limited liability company (LLC) can be a nonprofit.

However, forming a nonprofit limited liability company can be complex, so few people choose this option.

When people refer to nonprofits, they often mean a nonprofit corporation.

This is because many of the founders of nonprofits choose to incorporate.

Due to the many requirements for forming a nonprofit limited liability company, it could be easier to organize your nonprofit as a corporation.

How long does it take to get an LLC?

While filing the documents takes mere minutes online, the state takes a while to process your application for an LLC and then to authorize your business.

The processing time usually takes three to four weeks.

However, it can vary depending on how fast the state processes business filings.

In some states, once your intake information is received, the state agency often issues approval for the limited liability company within only three business days.

Across all 50 states, it takes an average of 14 to 21 days to set up an LLC.

Do I need a physical address for my LLC?

Yes, you do need a physical address for your LLC. The address can be your home address or a commercial address.

You can also use a virtual address or a PO Box because they are more convenient than having an agent pick up your mail and documents at the post office.

However, some states require that you have a physical address in the state where you are forming your LLC.