How to Register an LLC – Easy Guide with a Simplified Process

How to Register an LLC – Easy Guide with a Simplified Process

How to Register an LLC – Easy Guide with a Simplified Process

If you’re starting a business, you may be considering forming a limited liability company (LLC).

Many entrepreneurs choose an LLC because it offers a host of benefits, including personal liability protection and pass-through taxation. To form an LLC, you must register it with your state. However, there are a few other steps to follow.

Here you’ll find an easy guide to registering your LLC and to the other steps involved.

Check for Name Availability

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You’ve probably chosen the perfect name for your LLC – but you need to make sure the name is available to use. First, you’ll need to check your state’s LLC name regulations. In most states, certain words are prohibited, including bank and university. Your name must also include either the words “limited liability company” or one of its abbreviations. 

Once you know that your name meets your state’s guidelines, you’ll need to do a business name search on your Secretary of State’s website. Be sure to do this because if the name is already in use, your LLC registration will be rejected.

You’ll also need to make sure that the name is not nationally trademarked by visiting the United States Patent and Trademark Office’s website

Additionally, you may want to make sure the domain name you want is available by checking a site like GoDaddy. 

Pick a Registered Agent

Nearly every state requires that you appoint a registered agent for your LLC, which is a person or company authorized to accept official documents and correspondence on behalf of your LLC. Some LLC owners elect to be their own registered agents, but that can be restrictive because you’ll have to be personally available at your registered address during regular business hours. That keeps you from leaving to go to appointments or on sales calls.

Many entrepreneurs choose to hire a registered agent service instead. Registered agent services cost between $100 and $300 per year, but they can ensure that no important documents or deadlines are missed. 

Choose Your Management Structure

LLCs can be either member-managed or manager-managed. In a member-managed LLC, all members are actively involved in running the company. In a manager-managed LLC, one or more members is a silent partner, not involved in the company’s operations. The remaining members are designated as managers. In a manager-managed LLC, outside managers may also be hired.

In some states, you have to disclose your management structure when you officially form an LLC

Register Your LLC with the State

Now you’re ready to officially register your LLC with your state. Registering involves filing a document with the state, which is usually called the articles or organization. It’s usually filed with the Secretary of State’s office and can be done online. The information required on the document varies by state, but it generally requires your business name, address, and registered agent information.

Fees to file range from $40 to $500. 

Draft an Operating Agreement

You’re not done yet! An operating agreement is only required in a handful of states, but it’s in your best interests to have one. An operating agreement specifies the ownership percentages of members and how profits and losses are allocated. It also includes the management structure, and the roles and responsibilities of managers. 

Even if you’re the sole member of your LLC, you should still have an operating agreement. It will also contain provisions about how a member can be added, how the LLC can be dissolved, and what happens to the LLC if something happens to you.

You can find many operating agreement templates online, but you should consider having an attorney draft it for you, particularly if you LLC has more than one member. It will likely cost several hundred dollars, but an attorney can ensure that all members’ interests are protected. 

Business Licenses and Permits

You may need licenses and permits at the state and local levels, or even at the federal level, depending on your business type. A common state permit that may be required is a sales tax permit. Check with your state to see if what you offer is subject to sales tax. 

Then check with your state and local governments for other license and permit requirements.

You can find services online that can help you with the license and permit process for a fee.

Apply for an EIN

If your LLC has more than one member or if you’re going to have employees, you’re required to obtain an employer identification number (EIN). Your EIN allows the IRS to identify your business, much like a social security number does for individuals. You can apply on the IRS website for free. 

You may also have to register for state taxes, so check with your state’s Department of Revenue for requirements.

Final Steps

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A few more steps need to be taken before you start doing business.

Get Business Insurance

You’ll want to check with your insurance agent to see what types of business insurance they recommend based on your business type. You’ll certainly need general liability insurance, which protects you is several situations. You may also need professional liability insurance, which protects you if someone claims financial damage from an error or omission in your work. Other insurance needed might include equipment insurance, business property insurance, or commercial vehicle insurance.

Open a Business Bank Account

A business bank account is critical for LLCs. You must keep your business and personal finances separate, or it may appear that the line between you and the business is blurred. That can threaten your personal liability protection. Most banks offer business bank accounts. You’ll generally need to provide the bank with your EIN and a copy of your LLC formation documents when you open the account.

Check Annual Reporting Requirements

Most states have some sort of annual reporting requirement which simply verifies that you’re still doing business. Every state has its own reporting rules and fees. In most states the fees are minimal. Check your state’s requirements and put the due date on your calendar. 

In Closing

Registering an LLC is fairly straightforward, but you have many other tasks to complete to get your business off on the right foot. Many LLC formation services are available online that provide packages of services that can check off many of the boxes. It’s also a good idea to consult with your attorney and tax advisor about considerations specific to your business and situation. 

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Bhumesh Verma

Legal Expert

Bhumesh is the Managing Partner of Corp Comm Legal, an Indian law firm. He is ranked among the Top 100 Indian corporate lawyers. He is advising domestic and foreign companies on M&A, joint ventures, corporate - commercial issues. Besides, he has written a book on Drafting of Commercial Agreements, has a couple of books in pipeline and trains students and professionals on Drafting Skills and corporate laws. He writes regularly on legal, business & other issues and is a guest faculty lecturer with educational institutes. Bhumesh holds a Bachelor of Laws (LLB) from the University of Delhi and a further qualification in International Law and Legal Studies from College of Law, York.

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