Starting your Limited Liability Company
If you want to start a business, forming a Limited Liability Company — or LLC — could be a great choice. LLCs are designed to be simple and inexpensive to setup, and are easy to run. They have many of the advantages of larger businesses and corporations without all of the rules, regulations and legal compliance commonly found with other business entities. LLCs are registered with the government in your state.
Advantages of an LLC
LLCs have many benefits for businesses, especially small businesses and startups.
The paperwork involved in setting up an LLC is simple to complete, and you can complete the whole process, fast.
That means any liabilities your business has (debts, obligations and other liabilities) belong to it alone. Typically, even as the business owner, you will not be liable for your LLC's obligations.
You don’t need to hold annual general meetings, assign boards of directors or meet particularly onerous rules and regulations.
LLCs are easy to manage — you can add and amend members and make other changes without too much paperwork.
Any income earned by your LLC “flows through” to your personal tax return and is taxed as normal. Members report any profits or losses from the LLC on their personal tax returns. This can keep your accounting costs down.
Some corporations have to pay tax on their profits and then individuals pay tax again when they receive stock dividends. LLC members are not subject to this double taxation.
Creating an LLC: How to Set Up Your New LLC Business
There are six easy steps you need to take when setting up an LLC:
First, you’ll need to create an original name for your new business. This should be something distinctive that wouldn’t be confused with the name of another business or LLC. You will need to include a “designator” in the name of your business to show it’s an LLC.
This is normally through including a suffix of “LLC” or “Limited Company.” For example: Blue Widget Manufacturing, LLC or Bob Baker and Sons, Limited Company.
If you're looking for help with searching for your LLC name to see if it's taken, we've put together How to Search & Choose Your Business Entity Name in all 50 States.
Each LLC will need to have a designated business address. If you’re running a company from home, this can be the same as your home address. If you’re renting office space, it can be where your office is located. If you have multiple locations, it would be the address where your “head office” is. This will vary as some states will permit a PO Box.
Every LLC must have a registered agent. For small LLCs, this is generally the same person as the managing director or owner.
For small LLCs, this is generally the same person as the managing director or owner. The member — or owner — of an LLC can also serve as the registered agent, but some members will prefer to assign those responsibilities to another individual or company. The registered agent is simply the person who receives official legal and tax correspondence.
All of our online business formation packages include a “registered agent” service free for the first year and $119 per year thereafter.
The LLC members are typically the people who own and run the business. They are also the ones who can take profits out of the business to pay themselves. Most states require you to list the names and addresses of all members when you register the LLC. You can register these addresses as street addresses or P.O. boxes.
Some states require you to explain the purpose of your company. This does not limit you to engaging solely in that type of business — It's fine to expand into new areas later on.
Once you've gathered all the information together for your LLC, you’ll need to file formal documents with your state agency. We can do this on your behalf.
For more information on the steps you need to follow when starting your LLC, see Incfile's Help Center post on steps to starting a Limited Liability Company (LLC).
