While applying for an LLC is not complicated, it does involve several steps that need to be followed to ensure your business is formed correctly. Every state has different requirements that need to be met, so it’s important you ensure you meet them all. In this blog, we’ll discuss the common steps that need to be taken to form an LLC. Just be sure to check with your attorney for local requirements as well.
As with any business one of the first and most important things you need to do is choose a name for your business. This name will help you establish your brand’s identity so it’s good practice to choose a name that works for both business and marketing purposes.
Your business name also needs to indicate that your business is an LLC. This means you will need to use a designation such as "LLC" or "limited liability company" as a part of the name you choose.
It’s also important that you don’t include any words in your business that your state has restricted such as "Bank" or "Insurance". Check your state's list of restricted words to make sure your chosen business name doesn't contain any words it shouldn't.
Finally, you should make sure your business name doesn’t infringe on any existing trademark.
Once you've chosen a business name, you need to make sure another business isn’t already using that name in your state. You can check with your state's business office to provide you with further information as to how you can determine if another company is already using the name you have chosen.
If your business name is available, some states allow business owners to temporarily reserve the name until you're able to get your documentation filed. In most states, a business name is automatically registered when articles of organization are filed, so you most likely won't have to register the name separately.
It’s also a good idea to look into whether a domain name with a variation of your business name is available. It's a good idea to purchase a domain as soon as possible so you don't run the risk of losing it to another business owner.
It’s common for LLCs to operate under their business name, but some business owners will choose to run their business under a name that's different from its registered business name. If this is your plan, you will need to register a DBA ("doing business as") name. A DBA or assumed name is a business name that's different from your LLC's officially registered business name.
Check with local requirements to see if you are required to register your DBA name.
When creating an LLC, you will need to file articles of organization with your state. Some states also refer to this as a certificate of formation.
This is a simple document that can be obtained from your state's business or filing office. While the information that will be required varies from state to state, most commonly the only information required are the name and address of your LLC and the names of its members.
Once you've filled out your articles of organization, you will need to file it, along with the appropriate filing fee. In most states, you will file this with the Secretary of State, however, some states might require you to file them with another office.
Most states require LLCs to designate a registered agent, also known as an agent for the service of process. This is the person who will receive service of process notices, government correspondence, and compliance-related documents on behalf of your new business. It’s common for companies to designate one of the LLC members to act as the registered agent.
Even though most states don't require an LLC operating agreement, it's still a good idea to have one for your business. This is a document that provides structure for important internal business decisions.
Operating agreements often cover issues like percentage of ownership among members, voting rights and responsibilities, members' powers and duties, and provisions governing the transfer of members' interests.
Some states require new businesses to publish a notice in your local paper announcing the formation of your LLC. If your state has such a requirement, check with your state's business filing office for more information regarding the content of the notice, how many times it must be published, and any other requirements that may apply to fulfill this requirement.
Once you've registered your LLC, your next step is to begin obtaining any business permits and licenses required in your state to run your business. What is needed is dependent on state and local government requirements, as well as the industry your business is in.
Your LLC will need to have its own bank account to separate your business' funds from the owners’ personal funds. Different banks will have different documentation requirements to open a bank account to be sure to check with them first to see what documents are needed.
“It’s common for LLCs to operate under their business name, but some business owners will choose to run their business under a name that's different from its registered business name.“