The Steps to Forming an LLC

June 11, 2020
Devin Carroll

Have you wanted to start your own business, but have no idea where to start? No matter what you’ve heard, starting a business is a fairly simple process. Business entities take many forms. Many find that their business works best within the framework of a Limited Liability Company (LLC). LLCs provide a business structure with more personal protection for you and much less formality than other business models. LLCs are ideal options for both smaller businesses, like Sumsion Business Law, and much larger businesses, like Nike, Sony, or IBM. Large or small, here are four easy steps you’ll need to take before your business can become a reality.

1. Create a Name for your LLC

Creating a name for your company is among the first and more important steps you will take. Your name must be unique and distinct from any other LLC on file. It should cause your demographic to desire to purchase your services or products. The less words, the better. If your company’s name can’t convey your business model, service(s), product(s), and business value in 2-3 words or less, you’ve probably chosen the wrong name. Your chosen name ends with the designator “LLC” (Limited Liability Company). Contact your state’s LLC office to clear your name, and/or to reserve your LLC name until your certificate of organization is officially filed.

2. File a Certificate of Organization

A certificate of organization is a legal document that indicates your LLC has been properly formed. The certificate recognizes your business as an official, legal business entity within the state it was filed. Filing a certificate of organization is your first official legal step in the process of getting your company up and running. You file this certificate with your state’s LLC office.

3. Create and Prepare an LLC Operating Agreement

An operating agreement, like a certificate of organization, is an official legal document that outlines the business structure and rules for your business. Unlike the certificate of organization, however, the operating agreement is private. It comprises the rules and regulations for the ownership and operation of the company. Operating agreements include things like the members’ percentage interests within the company. It may also contain information about membership voting, management, profits, and losses, as well as the members’ rights and respective responsibilities within the company.

4. Acquire Licenses and Permits.

You are required to obtain all the necessary licenses and permits that come with running a business, before you can begin doing any business with your LLC. A common license and permit for managing a company are [1] a business license, allowing you to engage in business transactions, and [2] a seller’s permit, allowing you to sell your products. Business licenses can be retrieved from your state’s Department of Licensing, or through the United States Small Business Administration. Your state's Department of Revenue is authorized to issue seller’s permits. This may be the most time consuming step in the process, so begin early.

Need Help?

With these four steps, you are ready to start up your LLC. As experts in legal business transaction, Sumsion Business Law has the talent and the experience of over 30 years to cater to your business’s needs. Our team of professional attorneys and paralegals will help you at every step to ensure that you have all the proper legal documentation and the guidance you need to succeed in your business venture. So, if you’re ready to take your business to the next level, Sumsion Business Law can help!

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