So you’ve decided to start a business. Congratulations! Now it’s time to figure out how to get your business entity set up. One option is to file for an LLC or limited liability company. This business structure can offer liability protection for your assets and be simple to set up.
1. Determine the Business Structure That Best Suits Your Needs
When starting a business, one of the most important decisions is what type of business structure you will use. This decision can affect your liabilities, taxes, and other aspects of your business operations. Before selecting a structure, consider what it will look like in five years. Will your company remain small or become larger?
Choosing a business structure that provides the right amount of flexibility and protection for your long-term goals is important. If you’re unsure, consulting with financial advisors or an attorney can be invaluable. You should also research different structures to determine the most suitable one.
Choose an LLC or corporation if a sole proprietorship or partnership doesn’t protect you enough from liabilities. Regardless of which entity you select, ensure you have all documentation in order and follow the state and federal regulations for setting up a business.
2. Choose a Name for Your LLC
Securing a name for your LLC is one of the first steps in forming a legitimate business. This designation is an identifier that customers, competitors, and other parties can readily recognize. It must stand out from the crowd and meet certain criteria within your jurisdiction’s legal framework.
This might involve researching to ensure duplication isn’t taking place and that it’s inoffensive or devoid of negative connotations. Creative brainstorming is ultimately needed to create the right name for your LLC that best reflects its mission.
You want it to be memorable yet professional, conveying confidence and trustworthiness while avoiding anything overly similar to existing business entities. Ideally, you’ll brainstorm enough possibilities to have a few perfect and acceptable names for your LLC to choose from before deciding on the definitive one for registration.
3. File the Articles of Organization With Your State’s Secretary of State
The Articles of Organization (also known as the Certificate of Formation) is an official document that must be submitted to your state’s Secretary of State to establish an LLC legally. This filing will require you to provide basic information such as the legal name, address, purpose, and member details associated with the new business entity. Depending on the jurisdiction, additional information or documents may be required to complete the filing.
Before submitting your Articles of Organization, it is important to double-check all information for accuracy and make sure you have included all necessary documents. Failing to provide a complete application can result in delays in processing time.
4. Create an Operating Agreement for Your LLC
A strong Operating Agreement can help protect the interests of all members of the LLC. Ensuring you apply for an LLC that follows your state’s rules and regulations is important.
Once you have established the business structure, you should create an Operating Agreement. This agreement will cover initial capital contributions, decision-making processes, and financial duties. Outlining these items in a written contract can ensure that everyone involved understands their responsibilities within the organization.
An Operating Agreement also helps to make it easier to apply for loans or credit with banks since lenders like to see proof of well-defined rules of operation.
Combining necessary compliance standards with efficient communication amongst LLC members makes an Operating Agreement essential for running a successful business. Now that you know what an Operating Agreement is, it’s time to create one for your LLC! If done correctly, your Operating Agreement can set a successful foundation for your business, so it’s worth investing in it carefully!
5. Obtain Any Necessary Licenses and Permits
Determining what types of licenses and permits you need to operate your LLC legally are an important step. Depending on your business type, local and state laws will require you to obtain specific licenses to operate legally.
For example, suppose you’re a professional service provider, a food industry business, or a retail store. In that case, certain permits must be obtained to do business in your state. It is important to research these requirements and take the necessary steps to apply for them before launching your LLC.
Bottom Line
Opening a separate business bank account for your LLC is essential for tracking company expenses, income, and other financial transactions. This gives you a clearer understanding of your company’s financial situation and helps you file taxes easily. Additionally, it is important for legal purposes since having a business bank account can help ensure that your assets are protected in the case of unexpected liability issues.
