Business the Smart Way

Easy steps to form a limited liability company (LLC)

Separating your professional and personal life is more than just a sound practice for maintaining boundaries, it is the foundation for business that provides legal and financial protection and peace of mind. A limited liability company (LLC), as opposed to a sole proprietorship or general partnership, creates a separate entity from its owners, preventing owners from being personally responsible for business debts and liabilities.

To start an LLC, you must prepare and file Articles of Organization, sometimes also called a Certificate of Organization or Certificate of Formation, with the state you intend to do business in. To make your new LLC exist officially — to have it created —  you must file these documents with the Secretary of State’s office or whichever department handles business filings in that State  

Filing fees, along with any applicable initial franchise taxes or other initial fees, must also be paid. These vary according to the state.

After your LLC forms are filed, it is usually required that you hold an organisational meeting of the members/managers. This starts your LLC by adopting an operating agreement, issuing membership interest certificates to members, and undertaking other preliminary matters such as authorising the opening of a bank account for the LLC.

Two other important requirements are a registered office and registered agent.

Think of the registered office as the LLC’s home base, which must be a full street address in the state where your LLC is formed. It may be your office or home address or that of a friend or family member, where documents always can be received during normal working hours.

It is required that you appoint a registered agent when you start an LLC or register to transact business in another state. A registered agent fulfils your state’s legal requirements and provides ongoing compliance assistance for your business. Its services usually include franchise tax and annual report filing alerts, prompt handling of important legal and tax documents, and service of process delivery.

Service of process delivery includes LLC-related legal documents, such as documents relating to lawsuits, complaints, and summons/subpoenas and your registered agent must be available to accept these deliveries. In some states, your registered agent can also be used as a contact point for business and state tax notices, payment reminders and other documents via mail.

In most US states, your LLC cannot be its own registered agent. You can appoint a trusted friend or family member to be your registered agent, if they have a street address in the state where you are forming your LLC or you can appoint a commercial registered agent for a fee.

A commercial registered agent is useful, as it specialises in receiving service of process on behalf of businesses nationwide, for around $150-300 per year. Having a commercial registered agent frees you up as a business owner to focus on your primary goal of boosting your bottom line.

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