Top 6 Digital News

Disclosure: We receive advertising revenue from some partners. Learn More

Disclosure: We receive advertising revenue from some partners. Learn More

OUR PICK
Incfile.com
  • Incfile
  • OUR PARTNER
  • IncFile.com
  • EDITOR'S SCORE
  • 10 / 10
  • SUMMARY
  • Over 150,000 Businesses Served Since 2004

    Ranked A+ By Better Business Bureau (Accredited)

    Over 2,000 Excellent Customer Reviews
  • WHAT WE LIKE
  • $49 Base Rate

    One Year of Registered Agent Service Included

    One Hour Consultation With Tax Professional Included
  • BOTTOM LINE
  • We ranked IncFile #1 for a reason. Their competitive pricing coupled with an excellent customer service records are only two of the reasons that IncFile is gaining market share. If you are an entrepreneur ready to start your own LLC, we highly recommend checking out IncFile.
RocketLawyer
  • RocketLawyer
  • OUR PARTNER
  • RocketLawyer
  • EDITOR'S SCORE
  • 9.75 / 10
  • SUMMARY
  • Over 20 Million Customers Served Since 2008

    Ranked A+ By Better Business Bureau (Accredited)

    100% Satisfaction Guarantee For 30 Days
  • WHAT WE LIKE
  • $99 Base Rate

    Offers 7 Day Free Trial For Legal Services Subscription

    Easy Legal Documents & Affordable Legal Advice
  • BOTTOM LINE
  • Rocket Lawyer is one of the most popular online legal service providers. If you need ongoing legal help, you don't need to look much further. If you join their legal services plan, you will have access to legal document creation that could save you thousands of dollars in legal fees.
CorpNET
  • CorpNET
  • OUR PARTNER
  • CorpNET
  • EDITOR'S SCORE
  • 9.25 / 10
  • SUMMARY
  • Over 100,000 Businesses Served Since 1997

    Ranked A+ by Better Business Bureau (Accredited)

    100% Satisfaction Guarantee
  • WHAT WE LIKE
  • $79 Base Rate

    60 Day Registered Agent Service Included

    Family-Owned Business Approach To Customer Service
  • BOTTOM LINE
  • CorpNET is perfect for anyone looking to work with a company that has exceptional customer service and great prices. It has some of the most consistently positive customer reviews in the entire industry. CorpNet is very easy to use, offers great features and you know this is a company you can trust.
Northwest
  • Northwest
  • OUR PARTNER
  • Northwest Register Agent
  • EDITOR'S SCORE
  • 9 / 10
  • SUMMARY
  • 3rd Largest National Registered Agent Company

    Ranked A+ by the Better Business Bureau (Not Accredited)

    Elite Customer Service At Affordable Prices
  • WHAT WE LIKE
  • $39 Base Rate

    One Year of Registered Agent Service Included

    No hidden fees or “free trials” that cost money later
  • BOTTOM LINE
  • Northwest has built a strong reputation for providing quality services at fair prices to their clients. Between their volume discounts and local scanning of all documents, they’re one of the top registered agent providers. Northwest offer great value and is very reliable.
MyCorporation
  • MyCorporation
  • OUR PARTNER
  • MyCorporation
  • EDITOR'S SCORE
  • 9 / 10
  • SUMMARY
  • Served Over 1 Million Business Clients Since 1995

    Ranked A+ by Better Business Bureau (Not Accredited)

    Hundreds of Positive Customer Reviews
  • WHAT WE LIKE
  • $89 Base Rate

    Annual Report Filings Included in Standard, Deluxe & Premium Plans

    Offers Advanced Features Not Available With Competitors
  • BOTTOM LINE
  • MyCorporation put your mind at ease with their professionalism and experience, ensuring that every step is completed fast and correctly. MyCorporation is a strong contender to provide business licensing thanks to their great customer reviews and impressive client volume.
Legalzoom
  • Legalzoom
  • OUR PARTNER
  • Legalzoom
  • EDITOR'S SCORE
  • 8.5 / 10
  • SUMMARY
  • Served 3.6 Million Customers Since 1999

    Ranked A+ by Better Business Bureau (Accredited)

    100% Satisfaction Guarantee
  • WHAT WE LIKE
  • $149 Base Rate

    Incredible Brand Recognition

    Operates As Law Firm in United Kingdom
  • BOTTOM LINE
  • LegalZoom is a top-notch software with one of the easiest programs to use. It offers access to legal documents and attorney help - while on a budget. LegalZoom is a company that has a recognizable brand and reliability you may be looking for - a great choice for sure.

How To Form An LLC In 5 Simple Steps

For some reason, people make the assumption that starting your own Limited Liability Company (LLC) is a complicated process. Trust us when we tell you that it is actually quite easy. We are going to teach you how to make your own LLC and get the ball rolling quickly. Oh and you will not be spending hundreds of bucks on legal fees you do not need. This is our guide for you on how to form an LLC in five easy steps. By the time you are done reading this guide, you will know exactly what you need to do in order to have your very own Limited Liability Company.

Step 1: Selecting The State

First things first – you have to decide on the state in which your limited liability company is going to be registered. Our experience has shown us that it is very good for new business owners to have an LLC which has been formed in the state that they live in. That is what we will suggest to you. Selecting the state that your business will be based in is the first and most important step. Your best bet is to have your business in the state you already live in.

If you are sure that your business will have some sort of physical presence in other states (like storefronts or feet on the ground like sales representatives) then you will have to register what is known as a foreign LLC in the states that your business will be present in.

There is an argument for having your LLC formed in another state. Certain states in the country happen to have very business friendly rules and regulations. Nevada and Delaware are very good examples of states that have business friendly laws. The thing is, we do not feel that it is worth all the extra money you will have to pay for it nor is it worth the extra paperwork when you have to get your business registered across multiple states in the country.

So the first step is to choose your state and we feel that your best bet is the state you live in. There's no better way to go about it. It's easier and a lot more convenient than foreign state LLCs.

 

Step 2: Your Limited Liability Company's Name

Now that you know where you will be forming your LLC, you need to take the first step in actually making an LLC. What is it, you ask? Well, it is by naming your business, of course! Choosing the name for your business is the first step in the formation of the LLC. Every state in the country has its particular set of rules when it comes to what it allows for LLCs to be named. There are certain general guidelines that you need to keep in mind when it comes to naming your LLC.

  • The name has to include the phrase "limited liability company" or any of its abbreviations like “LLC” or “L.L.C.”
  • The name of your LLC absolutely cannot be something that can make it similar to the name of any government agencies. For instance, you cannot have anything for the name that may make it sound similar to FBI, State Department, Treasury, CIA, etc.
  • There are certain restricted words when it comes to naming LLCs. For instance 'bank', 'university' or 'attorney'. If your LLC is going to have a name which includes the restricted words, you might just have to fill some extra paperwork for it. You might also require someone like a lawyer or a doctor to be a part of your LLC. It all depends on the specifics of your company's nature and the need for the appropriate official related to that industry.

Of course with all of that being said, you should also conduct a name search. You cannot give a name to your LLC which has already been registered by another company. It will create a conflict of interest for both your LLC and the other business. It goes without saying that the name of your LLC should be something that truly reflects the nature of your company. Anything misleading or plain wrong would be detrimental for your business. Once you get the name registered, you cannot possibly hope to change it. It is not as easy as you might think. This is why naming your company is one of the things you really need to be careful about. Take your time when you are registering the name for your LLC.

Step 3: Selecting A Registered Agent

Once you know where your Limited Liability Company will be based and what you will be naming it, you will need to choose a registered agent for your LLC. What is it, you ask? Well, we will explain it in the simplest way we can. A registered agent is essentially a business or an individual who will be responsible for sending and receiving any and all legal documents at your behalf.

In some of the states, the registered agent is also known as the resident agent, a statutory or an agent for service of process. The legal documents can be anything ranging from document filings to legal summons. The registered agent will be responsible for receiving them and forwarding them to you.

Now most of the states in the US have mandated that every LLC should nominate a registered agent to represent them. Your registered agent has to be someone who resides in the state that your business is in. It could also be a business that has been authorized to carry out its operations in the state your LLC is in.

Every LLC must nominate a registered agent for their company according to the law in most of the states. It is actually possible for one of the members of your LLC to act as the registered agent but it can only be limited to an individual. The company itself cannot act as its own registered agent in any of the states.

Step 4: Filing Your Limited Liability Company With The State

Now let's get to the fun stuff. This is the point where you will officially form your LLC. In order to do that, you need to file the necessary documents with the state your LLC is going to do business in.

The most common name for this document is the Articles of Organization. There are other names for this document. It is also known as the Certificate of Organization or the Certificate of Formation. This document will be outlining the organizational infrastructure that your LLC will have.

By the way, there is one thing you should know. While you are filing your Certificate of Formation, you should have someone who is appointed as the manager for your LLC. Alternatively, you can have the owners of the LLC decide if they want to be co-managers of the LLC.

Having your own members manage the LLC should preferably be done when the number of members in the LLC is less. It also goes to say that in such a scenario, the members of the LLC should be willing and able to take part in all the day to day operational aspects of the business.

The member managed LLC will see the members actively participating in the business. It is also known as a decentralized management structure because the administrative power for the business operations is divided among the different members of the LLC instead of one person.

Appointing a manager who will handle the operational proceedings of the business should be opted for when the number of members in the LLC is relatively larger. This is also preferable when the members of the LLC are not actually interested in taking part in day to day operational aspects of the business.

A manager managed LLC structure sees the LLC members allocate management power to one or more managers. They are going to be the people that the LLC members deem fit when it comes to handling the day to day affairs of the company. The manager managed LLCs are not decentralized. The power to make the decisions about operational proceedings of the business lie with the manager(s).

Choosing the managerial structure for your LLC is crucial. You need to take as much time as you need to in order to come to a conclusion about this decision.

Before putting pen on paper when it comes to deciding the managerial structure of your limited liability company, there are a few questions that you should know the answers to:

  • What are the rights and the obligations that the members of your LLC require when it comes to the bigger picture of the LLC?
  • What is the level of involvement that members will be responsible for when it comes to the day to day operations of the business?
  • How many members does the business have?

A lot of states have default mandates which will automatically determine aspects of the managerial structure of an LLC. Having a local attorney work with you on deciding these things and understanding the state laws concerning this aspect would be a very good idea.

Step 5: Creating An Operating Agreement For Your Limited Liability Company

Now we come to the final step in creating and running your own LLC. You have to create an LLC operating agreement. It is basically a legal document which will define the structure of ownership of your LLC and the roles that all the members in your new LLC will play.

Keep in mind that most of the states in the US do not really mandate that your LLC should have an operating agreement but that does not change the fact that it is always good to have one. There are six main components that make up an LLC operating agreement:

  • Organization: This is the aspect of the operating agreement which defines when and where the LLC had been created. It also outlines how the ownership of the newly formed LLC has been structured.
  • Management and Voting: This is the aspect of the operating agreement which focuses on how the new LLC will be managed. It also determines how the members of the LLC will be conducting votes for all the decisions that need to be made as a company.
  • Capital Contributions: The capital contributions in the operating agreement will define which of the members from the team are going to be providing the financial support for the newly formed LLC. It will also outline how the LLC will be raising more capital as the company is taken forward.
  • Distributions: This is another important aspect of the operating agreement. It will outline how the profits made and the losses incurred by the limited liability company will be divided among the members of the company.
  • Membership Changes: This part of the operating agreement will define the necessary process when it comes to adding new members to the LLC. It will also outline the process for the removal of existing members in the LLC and how things will proceed if and when the members want to transfer their ownership shares.
  • Dissolution: While it may not come to a point where this part of the operating agreement needs to be used, it is always a good thing to define it. The dissolution aspect of your operating agreement will cover the circumstances which can lead towards the dissolution of the limited liability company.

So you see that it will only be helpful to have an operating agreement decided on regardless of whether or not the state you are mandates your LLC to have one.

Those were the five steps that you need to follow when it comes to forming and running your own limited liability company. Follow all these steps and research as much as you can about all the details so that you have all your bases properly covered. We hope that this guide will help you in your endeavors. Best of luck!