How to Start an LLC in 10 Easy Steps?

Do you want to form an LLC?


What is LLC?

LLC is an abbreviation for limited liability Company. LLC provides a business structure that offers limited liability protection and also pass-through taxation. Moreover, LLC is a separate unit from the owners. So the owners are not held accountable for any kind of business debt and liability.

Benefits of having LLC:

As compared to a general partnership LLC benefits a business to have limited liability, flexible partnership, shareholders are the managers, pass-through taxation, heightened credibility, limited compliance requirements, owner-pleased income distribution, and also helps in keeping records and costs.

Let’s have a look at 10 easy steps to start an LLC.


How to Start an LLC in 10 easy steps?



how to start an LLC in 10 easy steps

1. Select a name for your Business

The first and foremost step of starting an LLC and getting it approved is to pick an available name for your business. If you are thinking that you cannot select an already existing name in the market, then Yes you are right. You have to pick a name that may not confuse your business with someone others.

The name you select might be similar to someone’s but not the exact one. Your business name can also not include terms like corporation and Inc. as LLC is not a corporation.

2.Draft your Article of Organization

There is a policy in all States when you file for LLC, that you have to provide a document called an Article of Organization. It is also called the Certificate of Organization or Certificate of Formation. These documents are not very complexed and require simple things including a statement that describes the purpose of your business and an indication if the LLC will be managed by one or multiple members.

In most cases, the secretary of State provides a template with checkboxes and fill-in-the-blanks section. Moreover, online legal services like Legal Zoom and My Corporation provide templates for their clients as well.

3. Select a Registered Agent:

On the Article of Organization (mentioned above), you will also have to designate a registered agent. This registered agent will be responsible and authorized to receive all the legal documents on behalf of your business.

You can also choose yourself to be a registered agent or one of your fellow LLC members. On the other hand, you can also choose a registered agent service. The only purpose is to receive and store your business legal papers safely.

You can also hire a legal service as a registered agent like legal Zoom and My Corporation. They both offer registered agent services.

4. File with the Secretary of State:

Once you have prepared your Article of Organization and have selected the registered agent, you are ready to file your LLC. At this point, you have to send your Article of Organization to the Secretary of State.

You will have to pay the LLC filing fee. The filing fee may vary in States. In some states, it’s not more than $100 and in some, it’s more. In most cases people file the document in the State they live in or are planning to do business in. But if you are planning to have an online- business only then you may have the option of filing in a business-friendly state like Delaware.

5.  Create an LLC Operating Agreement:

Most of the States don’t require this step technically but still, it is an important step in forming an LLC especially if you have business partners.

This operating agreement will designate 3 things:

  • the share of each partner in the business
  • how and when will be a capital contribution made?
  • rules for appointing officers.

Don’t get stressed, you can get the standard Operating Agreement by lawyers that can be modified according to your likings. Most of the online legal services also provide Operating Agreement packages as well.

6. Obtain an Employee Identification Number (EIN):

Once you are done with all the steps mentioned above, you have to apply for an EIN number from the Internal Revenue Service (IRS).

If you are a single-member LLC, you can technically run your LLC taxes through your Social Security Number.

Apply for an EIN here

7. Secure the Necessary Business Licenses and Permits:

While reaching at this time, know that you have already formed a legal LLC but this doesn’t necessarily mean that you can begin doing commerce. You may need a business license according to the policy of your state or country.

You may also require secure additional permits depending on the policy of your State and country. In some cases, you may require to advertise your business in the local newspaper for a few days.

8.  Open a Business Checking Account:

One of the key points of having a successful business practice is to keep your business accounts separate. This will not only help you to keep track of your business account but will also keep you out of the trouble that may occur because of the IRS.

Don’t forget to take your Article of Organization, your EIN, and your business license along.

9. Choose your Tax Filing Status:

Know that LLC is a business structure and not a Tax designation. Forming an LLC will not have any automatic effect on your taxes.

Single member’s LLC is taxed like sole proprietorships and multi-member taxes are taxed like a partnership by default. One of the greatest things about LLC is that it offers impressive tax filing flexibility.

Though LLC is not a corporation in some cases LLC owners can be elected to receive S Corp tax treatment. Don’t forget to consult your business CPA before switching.

10.  Stay Current with your Annual Reports Filing:

In most of the States, the filing of annual reports is mandatory. You have to update all information regarding your business that might have changed i.e. name or address of your business.

In order to avoid any fine or LLC suspension don’t forget to file your annual report before the deadline assigned by the state.

We hope that after going through the 10 easy steps mentioned above, it would be tranquil for you to start an LLC.


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