Setting up a Limited Liability Company (LLC) is a desirable step in establishing a good business. All LLC formations are made based on already-determined state law with the benefit of offering protection as defined within these provisions.  Operating with an LLC is a sure way of getting your business streamlined and in good standing for expansion and growth. Different rules governing the establishment of an LLC vary from one to state another. However, there are those that cut across all states.

Forming an LLC is not a complicated procedure and you dot necessarily need legal counsel to get started. You may only need to engage these services in a case where the LLC will be co-owned by various partners. In such a case, you can go for help online and get the necessary preparation to file for the application at a modest fee. Here is how to proceed with your LLC formation:

Decide the LLC’s Location

All limited liability companies must have a physical address. Most importantly, its formation and registration depend on the existing rules and regulations in your state. Therefore, it is important to decide where the LLC will be organized. This will determine how the formation process will proceed.

Name your LLC

Come up with a good name for your LLC. It should be available, and not the name of an already existing business. Search will be conducted to ensure that your name is unique for you to use it. Remember that the name should end with “LLC.”

Prepare and File Articles of Organization

You need “articles of Organization” to form your LLC. Make them short and clear, stating the purpose of your LLC and its managers. After that, you will be required to make necessary legal documentation and make requisite fees to facilitate the registration process.

Prepare an Operating Agreement

Here, there will be details of the owner’s rights, responsibilities and financial management. Capital contributions made should be clearly stated alongside any remedies or penalties to that effect. Other important information includes profit and loss sharing and matters pertinent to the company’s financial affairs.

Assess Investors Input

Raising money from investors should be well analyzed if you plan to take that route. Most investors prefer corporations to LLCs. That way, you will know the options you got in raising money. Should you need investors’ participation, ensure you invoke securities laws by the state and the federal government.

Get an Employer Identification Number

Should you plan to have employees in your LLC, make sure you get an Employer Identification Number (EIN) from the IRS. It’s simply a Federal Tax Identification number. It is a requirement by the law and will give you credibility especially when dealing with other stakeholders in the market such as banks.

Get Business Licenses

To be able to function properly, you need all business licenses from the local, state and federal government. Ask for the kind of licensing you need based on your kind of business. Different businesses require difference licensing. Therefore, you must get what suits your business.

Get a Bank account for your Business

You cannot operate your business from a personal business account. For that reason, an LLC bank account will be required. Separate your business affairs from personal money accounts. Using your LLC’s name alongside the necessary documentation, your bank should facilitate that.

Keep Membership Ledger for your LLC

Membership ledger for your LLC is like a stock ledger used in corporations. This is where the names of the owners and their respective addresses will be listed. More to that, there will be the details of the class of units they have and the date of acquisition.

Keep up with Obligatory Filings

The governing authority will require annual report filing. Ensure that you keep up with them to avoid suspensions, penalties or even dissolution of your LLC. Find out what the law requires on such matters even as you move from one state to another.

There is a procedure to be followed when setting up an LLC. It is a demanding process that must be adhered to for the proper formation and functioning of your business entity. Once done with these requirements, you will stand a chance of running effective operations.


  • Gail Green



    Interior designer/decorator and founder of Gail Green Interiors.