How to Set Up an LLC in 7 Easy Steps
Starting any company can be intimidating for first-time entrepreneurs, but taking those first steps won’t seem too daunting with the proper guidance. However, you need to have sufficient funds before setting up your LLC. You may not need to have thousands of dollars to start a business, but you can’t build a company without money.
If you need money, you have the option to take out a loan. This may seem tedious, but with lending services platforms like GetCash.com, the loan application process is much easier. These platforms connect potential borrowers to a vast network of lenders that provide reasonable loan interest rates. You can get cash fast—as early as the same day—so you can focus on other important things to set up your LLC.
Step 1: Choose a State
The first step to setting up an LLC is to select the state where operations will be. For most first-time business owners, the state you live in is the most appropriate option. If you wish to establish your LLC in another state, extra paperwork and fees may be required, but states like Nevada and Alaska have LLC-friendly laws that you might want to check out.
Step 2: Choose a Business Name
When thinking of a name for your business, make sure that you’re mindful of state law requirements. Your business should not have the same name as an existing business. You might also need to include “LLC” or some version of it at the end.
Be sure to check the LLC naming requirements of your state. You can also visit the website of the Secretary of State or whichever state agency is in charge of business filings to check if the business name you want is still available.
Step 3: Assign a Registered Agent
An LLC needs someone to receive legal documents on its behalf, and that someone is called a registered agent. The registered agent then passes these documents on to the LLC’s chief executive upon receipt.
A registered agent needs to be over 18 years of age and can either be yourself, an employee, or a registered agent services company. The only other requirement is that the registered agent must be available during business hours in the state location of your LLC.
Step 4: Obtain an Articles of Organization Form
Most states call this document the articles of organization form, but some call it a certificate of formation. Regardless of what it’s called, you need to obtain a copy from the agency that takes care of business filings in your state, which is commonly the Secretary of State. You can go to their website and obtain a copy to establish the legality of your LLC.
Step 5: File the Articles of Organization Form
After the articles of organization form is filled out and signed, the next step is to file it. However, states like New York and Nebraska may need you to announce in the newspaper that you wish to register your LLC. Look into the requirements in your corresponding state so you don’t miss any steps.
Once the documents are approved, the state will issue a certificate indicating the formal registration of your LLC. This certificate is necessary to obtain your LLC’s tax ID number and set up a bank account.
Step 6: Establish an Operating Agreement
This agreement clearly defines the financial, management, and legal rights of each member of the LLC. This includes information on profit distribution, capital contribution, and how members can leave the LLC.
Although some states don’t require that you establish this agreement, it’s still beneficial to clearly define these stipulations. Of course, you can write your operating agreement, especially if you’re a solo business owner, but hiring an attorney is highly recommended.
Step 7: Obtain an EIN
An employer identification number or EIN is your LLC’s tax ID number, which is also like its social security number. The Internal Revenue Service utilizes these numbers to keep track of businesses for tax purposes. Banks may also ask for your LLC’s EIN when opening a business bank account.
There are two ways to apply for an EIN via the IRS: online or by mail. If you choose the online option, you can get your EIN immediately after applying.
Now that you know the steps to set up your LLC, you can move on to the next crucial steps, such as opening a business bank account and hiring an accountant.
The important thing in starting any business is not to get too overwhelmed by the enormity of the tasks but to tackle them one step at a time.