If you want to create an LLC, there are a few things you should know. For instance, what the letters LLC mean. LLC stands for limited liability company and is sometimes referred to as a company WLL (with limited liability). LLCs do not necessarily need to be formed for profit and are a form of enterprise that bring together elements of a partnership and corporate structures. It’s a type of unincorporated association and, though many think the “C” in LLC stands for “corporation, it is not a corporation (though it’s a business entity and can share some of the characteristics of one). The main thing LLCs and corporations have in common is “limited liability,” the idea that a person’s financial liability is limited to a fixed sum, usually the value of a person’s investment in a company or partnership with limited liability. LLCs are more flexible than corpor ations and do well for businesses that have a sole owner. best registered agent service
Perhaps one of the biggest differences between a corporation and an LLC is that owners of LLCs are more vulnerable to personal liability, specifically if fraud or misrepresentation is involved.
Now that you know just what an LLC is, it’s time to learn about the basics of starting an LLC. Here are the steps you’ll have to take (for the sake of argument let’s say you’re forming an LLC in New York):
Check for name availability. You’ll need an identifying name for your company that hasn’t yet been registered in New York and meets the name restrictions. For instance, the presence of the words Limited Liability Company, or the initials L.L.C/LLC.
Find a Registered Agent, or someone who will receive all the correspondence from the state to the company. He or she doesn’t have to be a member of the LLC. File the necessary paperwork. The primary document you’ll need to fill out are called articles of organization, on which you’ll need to provide the name of the company; the purpose of the LLC; the name and address of the Registered Agent; and the duration of the company. (This can be left as “perpetual,” or you can choose a date on which the company will be dissolved.) The fee to file is $200 in New York.
Apply for an Employer Identification Number (EIN) from the IRS. This is the same as a tax identification number, but for the LLC as opposed to an individual. You’ll need it to open a bank account or hire employees for the company. There is no fee to apply.
Create a Company Operating Agreement, a legal document which will outline the ownership of the company (decision-making and profit-sharing process). This is optional in most states; New York, however, requires it. Even were it not required it’s suggested, as it’s good to have clear boundaries within the company.