Step-by-Step Guide to LLC Forms & the Formation Process
You have plenty of choice when it comes to forming your own business. Some entrepreneurs will choose to use a company formation service, while others will want to do everything themselves.
While the DIY route can be more complex, it will also give you insight into the details of creating a limited liability company (LLC). Read on for a step-by-step guide to the various forms, filings and other factors that you’ll need to successfully start your business.
1) Understand if an LLC Is Right for You
There are several types of business entities that you can form, the main ones being an LLC, an S Corporation or a C Corporation. It’s important to understand the differences and benefits of each. For most small businesses, an LLC provides the right balance of simplicity, ease of management and liability protection.
2) Find the State Government Body Responsible for Forming Businesses
Businesses are formed on a state level, and each state has a governing body that you will file your business paperwork with to formally create your business. For most states, this will be the Secretary of State, although others may have a Division of Corporations or a similar agency. You can find the right one for your state by searching for your state name and “start a business.”
3) Locate Your State’s LLC Incorporation Form
Visit the website of your state business formation agency and look for the relevant form for starting a “Domestic LLC.” These forms tend to be called “Articles of Organization,” “Articles of Incorporation” or a “Certificate of Formation.”
Once you’ve found the form, make certain that it’s for requesting the formation of an LLC. Then, download a copy and review the requirements and instructions. Although requirements do vary between states, at a minimum you will need to provide:
- The formal name of your LLC
- The address of your LLC
- The Registered Agent’s name and address for your LLC
- The name of the incorporator (probably you)
Optional requirements might include:
- The names and addresses of the managers or members of your LLC
- The purpose of your LLC
- How long your LLC will be in existence
- Other requirements
4) Fill In the Correct Information on Your LLC Form
Now you know the information you’ll need to provide, you can collect it from the relevant places.
- Search for your intended name on the website of the business formation agency to check it’s not already in use.
- Provide the address for your LLC — these requirements do vary between states.
- Decide if you want to act as your own Registered Agent, or if you want to use a separate service.
- Add the name of the incorporator.
- Review and provide any other requested information.
We provide a handy, central tool to let you check your business name against the business registers for multiple states.
We also provide some state-by-state LLC guides on areas like business naming and address rules, Registered Agents and several other areas.
Differences Between Member-Managed and Manager-Managed LLCs
The formation document may ask you about the managers or members of your LLC, and it’s worth defining the differences between them.
A member-manged LLC simply means that all the members of an LLC (typically the owners of the business) are responsible for managing day-to-day operations. This is the most common type of LLC.
Manager-managed LLCs are where some members of the LLC don’t want to be involved in day-to-day management of the business. For example, they may be passive investors, or they may simply not want the responsibility of business management. In manager-managed LLCs, certain members or non-members may be delegated to run business operations.
Establish a Registered Agent
A Registered Agent is a person or business that will receive official correspondence for your LLC. It’s an official position, and every LLC or corporation is required to have one. You can name yourself as your Registered Agent, have someone else in your business complete that role or use a Registered Agent service.
5) Complete, Sign and File Your LLC Formation Document
Fill in your LLC form and double-check that all the information is up to date and accurate. Assuming you’re the incorporator, you can sign and date the form. Once that’s done, submit it to the formation body. Some states will allow you to file online, while others will need you to post the form back to them.
6) Pay Your LLC Formation Fee
When you file your formation document with the state, you will also need to pay a fee. That fee can vary widely between states. You may also have the option of paying a higher fee to speed up the processing of your formation document.
7) Register for Taxes with the Relevant Authorities
You will need to register to file and pay taxes with the IRS and your state Department of Revenue.
Get an Employer Identification Number from the IRS
Your LLC will require an Employer Identification Number (EIN) that uniquely identifies it. You can apply for an EIN online with the IRS.
Register to Pay Taxes with Your State
The Department of Revenue in your state will collect various taxes, including:
- State tax, if it’s payable in your state
- Sales and Use tax, if you’re selling taxable goods or services
- Other taxes, depending on your type of business
8) Get Permits and Licenses for Your LLC
You may need to apply for additional permits and licenses for your LLC, depending on several factors:
- Your location, as you may need to apply for a local business license
- The type of business that you operate, as some industries require additional licensing
- Who you are selling to — for example, if you’re exporting abroad, you may need a permit
- Other factors
Incfile can research licenses and permits on your behalf.
9) File Ongoing LLC Reports
Many states will require you to file a report about your business on an annual or other periodic basis. You will probably also need to pay a fee when filing your report.
We hope you’ve found this guide helpful and that it gives you the knowledge to form an LLC on your own. Remember that if you want to take advantage of an easy formation process instead, Incfile provides complete incorporation services.