How to Set Up an LLC

If you are planning to start a business, you need to know the legal aspects of setting up one. The law of every state in USA dictates the way in which an organization can be run. There are various types of enterprises that you can set up legally, with different legal structure and organization. One of the many types of enterprises you can set up is a Limited Liability Company (LLC).

What is a Limited Liability Company?

Before we talk about how to set up an LLC, let us see what it's all about. LLC is not a corporation, though it does share some of the features of a corporation. It is somewhat of a cross between a corporation, a sole proprietorship and a partnership. It inherits many features of all three. One of its prime features is the clause of 'limited liability'. This clause talks about the degree of liability of an owner of a company.

It states that the liability of an owner or partner is limited to the amount of investment he or she has made in the company; thus protecting them in the process. Another feature of note, that is related to a LLC is pass through income tax. According to it, the company is a flow-through entity, whose income is entirely treated to be that of its owners. This kind of legal enterprise structure is preferred by businesses who have a single owner.

How do I Set Up an LLC?

Like any legal procedure, setting up an LLC involves filling up forms! So brace yourself for some paperwork. Let me walk you through the whole procedure.

Get LLC Articles of Organization Form
Firstly, you need to get hold of the 'Articles of Organization' form, which is necessary part of procedure. You can procure it from the secretary of state office in your city. Know the laws regarding setting up an LLC, which are specific to your state. Read the whole form thoroughly and collect all the documents that are required.

Select a Business Name
According to law, you need to have a unique name for your business, which will be followed by 'LLC'. So think of a good name for your business, as you will have to fill it up in the form and your business, after registration, will be referred to by that name.

Complete the Form
Enter all the requisite details about the company, which includes details of the owner and partners, if any. You will have to supply the address of the company along with other contact details. One person needs to be specified as a contact person for legal matters, if any legal correspondence arises in the future.

Announce it in Print Media
By law, it is necessary that you officially announce the launch of your company in the print media and preferably a newspaper. According to most state laws, you will need to do this prior to the submission of articles of organization form.

Submit Form and Pay Fees
The last step, of course, is to submit the duly completed form to the secretary of state office, with requisite details provided. Setting up an LLC will cost you anything ranging between $40 to $800. The whole procedure takes less than a week.

Create an Operating Agreement
Though it is not at all necessary that you submit an LLC operating agreement for setting up the LLC, you need to make one later. The agreement carries all the information regarding sharing of responsibilities and finances among partners, if any.

If you think that the procedure is too complex, there is always the option of going for a lawyer, who can do it for a fee. Make sure that all the legal requirements for setting up your company are met, so that you do not face any problems in the future. All the best!