Getting your business started is not the hardest part of being an entrepreneur. For most people, it’s trying to get through all of the legal technicalities that come with starting a successful business. So today we are going to go through the steps of setting up an LLC for your business.
Quick reminder that I am not a lawyer and this is not legal advice or even a comprehensive list of everything you will need to do. Everyone’s situation is different and you should consult with the appropriate professionals for detailed help. What would apply to outsourcing companies won’t apply to a restaurant, for example.
What is an LLC?
A Limited Liability Company is a hybrid business organization. An LLC is just a business entity that will protect you, as the business owner, from having personal assets taken in the event of a lawsuit.
Advantages of an LLC
An LLC combines the tax benefits of pass through income taxation that a partnership would offer with of the liability protection a corporation provides. For example if you are working on a government bid you will need to separate your personal assets from your business assets in the case of a lawsuit. Find Cordell Government Tenders here.
Steps to Setting Up a Limited Liability Company
Choose a Name for Your Business
The first thing you’ll need to do is decide on the name for your LLC. In most states you must include LLC or Limited Liability Company in your name. For example, Financial Success for Young Adults, LLC.
Then you’ll need to make sure that name is not taken by searching the availability of your business name. If you go to the Secretary of State website you should be able to search the availability. In Georgia, you can visit the Secretary of State website to search for corporate name availability.
Choose a Registered Agent
The registered agent will be the official agent of the corporation that will receive all of the correspondence from the state to the company. This person does not have to be a member of the LLC. Many limited liability companies choose to have their lawyer represent them as the registered agent.
Register Your Name
Once you select a name you will need to visit the Secretary of State, in most cases, and register your name in order to begin the process.
Create an Operating Agreement
You will then need to create an operating agreement that will outline the operations and various other key points such as the share of profits between the owners and the rights and responsibilities of each owner. It will also need to layout the ownership percentage of each member, the voting rights and rules for meeting as well as the management plan for the business.
Write the LLC Articles of Organization
The Articles of Organization is usually a one page summary of the essential information of the business. It is standard for all LLCs and should contain the name of the company, the purpose of the company, the name and address of the registered agent of the company, and the duration of the company.
File with the Secretary of State
You will then need to take your paperwork down to the Secretary of State to file.
Apply for an EIN from the IRS
Getting an EIN (employer identification number) from the IRS will allow you to open a bank account, get a small business loan, apply for business licenses and file your taxes by mail.
Once you have completed these steps you will have a new born baby LLC! It is a legal entity that has the ability to own other LLCs, open brokerage accounts and buy and sell assets. Don’t want to do this by yourself? Let the folks at LegalZoom worry about all of the paperwork.
What was your experience like when you filed for your LLC?