The five easy steps that one should know when forming an LLC
The steps of starting an LLC are as easy as ABC but, for the LLC start-up to be successful the necessary steps need to be followed accordingly. The five basic steps of an LLC formation are: selecting a state, giving the LLC a name, choosing a legitimate and registered agent, the articles of the organisation need to be filed and lastly, the operating agreement needs to be created.
Since the regulations of an LLC differ from state to state, an LLC can be registered in any state, it does not have to be the state in which the potential members live in. to choose a state in which you would like the LLC to be in, you need to consider the annual maintenance fees. According to the Wall Street Journal, an LLC in California can cost up to $800 which is more costly than choosing to have an LLC in Delaware.
How do you select a name when you decide to form an LLC?
Secondly, picking a name for the potential LLC is not as important as operating the business. The naming guidelines for an LLC also differs from state to state as an LLC can be registered in one name and trade under another name. However, when selecting a name, it needs to include LLC. Keep in mind that the name should not include something that could make it seem like a government entity. Once a name for the LLC has been selected, the name needs to be put on the articles of the organisation. The articles of the organisation are extremely simple, and the forms can be accessed on the Department of State website.
Filling in the form may require different information from state to state. If you decided to start an LLC in Colorado the information required for the articles of the organisation would be: the name and contact information of the individual, the name of the LLC as well as the contact information, the name of the chosen registered agent will also be required and lastly, the information of the individual that will manage the business. Submitting the articles will require a signature, and paying the filing fee which can cost $50 to $500.
What are the requirements for an Operating Agreement for an LLC?
The written operational agreement would be the fourth step of starting an LLC. The operating agreement is what makes the LLC official. Luckily, the agreement is not required by most states however, it is highly recommended. The operating agreement requires important information in the form of five steps. The information that will be required for the agreement are as follows:
- Who the LLC is owned by.
- What are the roles of each member of the LLC?
- The individual financially responsible for the LLC.
- The profits of the LLC and how they are allocated per member.
- What would lead to the dissolvement of the LLC.
The operating agreement is crucial if the members want to take full advantage of the LLC which includes the earnings flexibility. The fifth and final step of starting an LLC is finding a registered agent.
The role a registered agent plays when forming an LLC
A registered agent is an individual who will be responsible for all the following activities:
- Processing and receiving of official documentation
Furthermore, the agent can keep all the documentation backed up. However, the agent needs to have an office where the LLC is registered which will make it easier for the documents to be received during working business hours.