How To LLC

Although setting up LLC (limited liability company) is a little more difficult compared to a sole proprietorship or a partnership, running it is much easier that when you run a corporation. It is also easier to set up than setting up a corporation. This is the reason more and more entrepreneurs decide on setting up an LLC instead of the other forms of business structures.

LLCs are known for their taxation and limited liability features. Being a pass-through entity allows it to pass through to its members the profits and losses that they will in turn record in their personal tax return. This will negate the need for the LLC to pay corporate taxes like that of a partnership. In terms of its liability feature, the LLC protects its members from any personal liability derived from debts or acts made by the LLC. An LLC may apply for bankruptcy without the member fearing that his personal properties may be taken away to pay for the LLC’s debts. These advantages have made many businessmen convinced in setting up an LLC.

Setting up an LLC is really very simple. Very few basic steps are all that is needed and you instantly have your very own LLC. First thing to do is to think of a name for your LLC. Make sure the name you choose will comply with your state’s rules on LLCs. Secondly, prepare and file the LLC’s Articles of Organization which is required by law. When you file this, the name you chose will also automatically be registered, as long as it is valid. The next is to pay for the fees. Fees may be as little as $100 to $800. The discrepancy is basically the annual tax imposed by some states, like California, on top of the filing fee. Once this is done, you may already prepare an operating agreement. This document is not required by law but is nevertheless important since it will contain the LLC’s members’ rights as well as their responsibilities. It may also indicate the distribution of profits or losses and many other important details.

Another requirement by many states, although not all, is to have your intent in setting up an LLC published in local newspapers. This should be done several times in a period of several weeks, afterwhich, an affidavit of publication should be submitted to the filing office. The last step before you can finally start doing business is the need to secure the necessary permits and licenses required by your state. These documents officially allow you to start your business operation. Some of these permits are the business license, employer ID number, zoning permit and seller’s permit.

After knowing all the necessary things you need to do in setting up an LLC and you still want further information and assistance in its formation, it is advisable to seek the services of LLC business advisors. They may do all the documentation gathering, preparation and even filing for you. Further information may also be obtained from the internet in setting up LLC. Simply browse the net and find what you need online.