How to Register an LLC: A Quick Guide to Registering Your LLC
You've developed a groundbreaking business plan, found the ideal commercial space and chosen a unique company name — now all that's left to do is register your business. The business structure you choose indicates your level of liability, tax benefits and growth potential.
One type of business structure you can choose is a limited liability corporation (LLC). While the process of registering as an LLC is fairly straightforward, we've put together a guide to make launching your business even easier.
What Is an LLC?
An LLC is a business structure that allows for at least one member with no maximum number of members. It's a popular entity choice for small to medium businesses as it offers maximum tax flexibility and limited liability. LLCs may comprise individuals, partnerships, corporations and even other LLCs.
Advantages of an LLC
Entrepreneurs who choose to register their business as an LLC experience the following benefits:
- Personal asset protection: In the event of a legal dispute, an owner's assets — such as vehicles, real estate and private investments — remain separate from the company.
- Tax versatility: You can pay self-employment tax, personal tax or corporate tax for better returns.
- Less paperwork: Unlike corporations, there are fewer compliance requirements to submit, making LLCs easier to manage.
- Customizable structure: Owners have the freedom to decide how to share profits and business control.
- Business name ownership: As a registered LLC, no other businesses in your state can use your business name. An exclusive business name contributes to increased brand recognition.
How to Start an LLC
While registering your business as an LLC differs slightly across states, there are four common steps to consider.
1. Choose a Unique LLC Name
According to the United States Small Business Administration, there are currently over 33 million small businesses in America. Finding an original business name helps differentiate your company from the many other enterprises operating in your state. In addition, a unique business name is a requirement for LLCs and, as such, must comply with the following:
- Include the LLC designation, such as “Limited Liability Company,” “LLC,” or “L.L.C.”
- Ensure the name is not associated with any government agencies
- Add relevant licensing information
2. Appoint a Registered Agent
Every state requires that a Registered Agent be appointed to accept Service of Process on behalf of the business. Service of Process only refers to official documentation being sent to the business from a government agency, generally notice of pending litigation.
There are requirements of a qualified registered agent, including:
- Must have a physical location within the state of registration
- Must be present at that location during normal business hours
- Must consent to the appointment, thereby committing to providing Service of Process information to the owners of the business.
3. Draft and File Articles of Organization
An Articles of Organization form is a paperwork requirement necessary to register your company as an LLC. There are statutory requirements for this document to define certain aspects of the entity that is being created, including:
- Your unique business name
- Your registered agent's name and address
- The start date of your LLC
- Some states require more information, like owner (referred to as members) information or a description of the business
4. Create an LLC Operating Agreement
While the state does not require an operating agreement, many banks and vendors do. An operating agreement is a document that defines the relationship between the members and the business itself. It states specifically what individuals have what power to act on behalf of the business and how the business operates, including:
- Banking
- Entering into contracts
- Profit distribution
- Member joining/leaving procedures
- Operations management details
- Liability terms and conditions
Other Key LLC Components to Consider
Completing the previous four steps will enable you to register your LLC successfully. You'll then need to ensure ongoing compliance and tax status by applying for an employer identification number (EIN) and filing annual reports.
Obtaining an EIN
An EIN is a nine-digit number that identifies your business for tax administration. All LLCs will require an EIN for opening a business bank account, applying for business loans or credit, and appointing and paying staff.
It is imperative that all of the information associated with the EIN is exactly the same as the state filing, or banks and other entities will reject it. Using a service like Firstep Business Solutions to form your LLC can ensure that all filings will correspond despite being filed with various agencies.
Compliance with Ongoing Requirements
Aside from submitting an annual tax return, LLCs have a few other compliance requirements to attend to ensure their business doors stay open. Other compliance regulations include:
- Annual report: An annual report notifies the state that your business remains in operation. LLC owners should include information such as product/service details, investor information and upcoming business plans in this document. They are also responsible for mentioning any business changes in the report, such as a new business address.
- Business information changes: Changes to your business name, the purpose of your enterprise or your address must appear in writing to your state. Informing your state of these changes ensures your ongoing compliance and seamless operation.
Register Your LLC Online Today
From choosing a unique LLC name to creating a comprehensive operating agreement, there are many important steps to registering an LLC. Partnering with a qualified formation assistance service helps to minimize the complexity during this process, allowing you to form your LLC online with ease.
Firstep Business Solutions helps entrepreneurs like you breeze through the LLC registration paperwork so you can begin changing the world with your products and services. Learn more about how our business structure services help you launch and grow an LLC, or get started with forming your LLC today!
