How To Create An LLC: A 5 Step Guide
How to Create an LLC
1. Designate a Registered Agent
Your registered agent and address will be listed on your paperwork. The registered agent must be available at all times to receive your LLC’s state and legal mail. If you choose to be your registered agent, your name and address will be permanently public. A registered agent service is a great way to keep your personal information private.
Corporations and LLCs must appoint a registered representative when they are formed. They also need to have a local agent where they do business in each state. As part of due process, a registered agent is required. A registered agent’s primary function is to ensure your business is adequately notified if involved in any legal proceedings. Due process stipulates that all parties must be appropriately notified before any lawsuit or other legal action can proceed in court.
2. Name your LLC
Before creating an LLC, you need to choose the right business name. Every state has an online database that allows you to search for available names.
You should avoid using restricted words and phrases when choosing a name. Instead, include a unique identifier for your business, such as “LLC” or “LLC.” Visit our list of the best LLC services for assistance with naming your LLC and forming an LLC online.
3. Submit LLC Articles of Organization
After making the major decisions, it is time to file the LLC state forms, also known as “Articles of Organization,” in most states. There are many requirements, but you will need to include the name of your L.L.C., the registered agent, and your signature. The Secretary of State processes LLC formation documents.
4. Register for an EIN
You will likely require a federal tax ID from IRS after establishing an LLC. The Federal Employer Identification Number, also known as an EIN or FEIN, is similar to a social security number for your LLC. An EIN is required for every LLC that hires employees or pays taxes. Fill out Form SS-4 to apply for an EIN at the IRS. It takes only a few seconds to apply online at the IRS website.
Why Do I Need An Federal EIN?
The unique number that the IRS assigns to your company is FEIN, EIN, or Federal Tax ID. The IRS uses this number to identify your company in federal filings.
For federal corporate income tax filings, corporations must obtain a FEIN. For other filings, most other businesses will also require a FEIN. To report with the IRS on withholding, Medicare, and social security, you will need a tax ID number if you have employees.
To better separate your business and yourself, it’s a bright idea to obtain a federal tax ID number. Business IDs could be required for everything, from vendor contracts to business license applications. You can still use your personal social security number without a federal tax ID.
How do I get a Tax ID Number from the IRS?
The IRS offers a few ways to get a FEIN. Online applications can be made at the IRS website. Fax the application. The application can also be mailed in. You can also hire a professional service like Northwest Registered Agent.
Although you can obtain a FEIN by yourself, if you do it wrong, you will be notifying many different IRS parts that you don’t need, filling out zero returns, and sending paperwork back and forth between the IRS for months.
One of our top recommendations for business formations is Northwest Registered Agent. Northwest is a specialist in the formation of LLCs and corporations. For $50, you can order a FEIN. They charge $200 if you do not have a social insurance number. These applications are paper-based and cannot be submitted online. They get your federal tax ID number right the first time. Many times, you will have it by the end of that day.
5. Create an LLC Operating Agreement
Your LLC’s operating agreement is its governing document. The operating agreement will outline how the LLC will distribute its profits and losses, who holds what percentage, the management structure, and everything else. Operating agreements are internal documents and don’t have to be filed with any state agency. It is not necessary to operate an LLC without it.
6. Register for a Bank Account
You must ensure that your LLC is not subject to any personal liability. You will need to separate your personal and business assets to do this. A few documents are required to open an account: the Articles of Organization, Operating Agreement, and EIN. Depending on which bank you choose to open a bank account, you may need an LLC resolution.
You should make sure that you have everything you require. To open an LLC Bank account, we offer a free LLC resolution.
7. The LLC should be funded
It doesn’t make much sense to keep your business bank account empty. Capital contributions must fund your new LLC. Let’s suppose your startup needs $10,000. Each member would contribute $10K of their own money or assets to the new account. Members receive a percentage of the membership interest in return. If people wish to contribute more, they can always change the percentages.
8. Filing State Reports and Taxes
Your state might require that you update or confirm the company information after forming an LLC. Sometimes, renewals and reports can be combined with state requirements. Arkansas, for example, has an annual report and an annual franchise tax. In some states, such as Nevada and Washington, L.L.C.s are required to file an initial report. This report is due shortly after or upon the start of your business. Each state has its LLC tax requirements. These can range from informational filings to franchise taxes.
Consider Creating an LLC With an Online LLC Formation Service
Tip: Using an affordable online LLC formation service is a popular option. Our top recommended LLC formation service for 2022 is Northwest Registered Agent.
- Northwest Registered Agent
- Swyft Filings
- Active Filings
- Rocket Lawyer
- Inc Authority
Brian Wilson is the content manager and founder of LLC Radar.
Brian grew up in North Texas, just outside of Dallas, and has a bachelor’s degree in business journalism from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications.
Brian resides in Plano, Texas and he can be reached by email: firstname.lastname@example.org
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