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How to Start (and Keep) an LLC: 

Formation and Other Required Formalities: 12 steps

1. Name:
Select a unique company name. [1]  Your LLC name must generally contain the words “limited liability company,” or the abbreviations “L.L.C.,” or “LLC.”  It must generally not contain words or phrases that would indicate authorization to operate in certain restricted industries, or the words or abbreviations “corporation,” “corp.,”  “incorporated,” “inc.,” “ltd.,” “co.,” “limited partnership,” or “l.p.”.  Please consult your state LLC act.

Determine whether your chosen business name is already being used in your state by searching your state’s LLC and corporate databases.  Your LLC’s name must generally be distinguishable from any other LLC or corporate name recorded, registered, or reserved in your state.  You may additionally want to search your state’s limited partnership database, do a general online search, search your local fictitious or assumed name database, and search state and federal trademark databases.  A domain name search may also be helpful.

If necessary, take any steps required to reserve or protect your chosen name prior to organization.

You may generally adopt and register an assumed name.  Consult your state’s LLC act and local rules to follow and comply with all requirements and procedures.

You may also register your business name as a state or federal trademark.  This is a good idea, but not a requirement.

2. Registered Agent and Office:
Determine who will serve as your corporation’s registered agent, and note the address of that “person’s” office.  Your registered agent is a person upon whom all process (any legal document which must be served on the LLC and to which it must respond) on the LLC may be served.  Your agent must agree to act as your agent.  You will name the registered agent and registered office in your articles/certificate of organization to provide a public record of a person upon whom process may be served.

Your state of organization may require that your agent reside, and their office be located, in state.  Please consult your LLC statute regarding applicable requirements.

3. Management Type:
If your state allows member-managed and manager-managed LLCs, determine your management type.  You will need to designate this in your articles/certificate of organization.  A member-managed LLC will function similarly to a general partnership.  Members share ownership, management, and conduct in proportions designated by statute or the operating agreement.  Like a partnership, a member-managed LLC’s management structure generally functions as a democracy.  The other option is a manager-managed LLC.  A manager-managed LLC separates ownership from management.  This management structure allows a single or multiple manager(s) to control decision-making.  The members generally appoint or elect the manager(s).  A manager-managed LLC’s management structure functions more like a hierarchy.

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4. Articles of Organization (or Certificate of Organization):
Execute and file your articles/certificate of organization with the Secretary of State in your state of formation (along with any required filing fees).  Required data varies by state.  Your articles/certificate will generally require such information as:

  • 1. LLC name;
  • 2. Business purpose;
  • 3. The name of your registered agent and address of your registered agent’s office;
  • 4. Term of entity duration, which may be limited or perpetual;
  • 5. Management type, if optional in your state; and
  • 6. Names and addresses of initial member(s) or manager(s).

Your LLC is generally organized upon the filing of your articles/certificate of organization.

5. Operating Agreement:
Execute an operating agreement.  Operating agreements are generally not required for LLC formation, but a thoughtfully executed agreement is important, and recommended for smooth LLC governance.  Your operating agreement should generally cover issues related to structure and management, member contributions, any profit and loss allocations, member and manager rights, duties, and obligations, transfers of ownership, valuation, etc.  Working through the decision-making process regarding LLC governance issues is an important step in realizing your business, and especially crucial where multiple parties are involved to ensure mutual understanding and clear, harmonious intention.  Your operating agreement is a contract.  Subject to state law, it is the primary document governing and detailing your business, and the rights, duties, relationships, and responsibilities of its participants to the LLC, each other, and third parties.  It becomes part of the law by which you and your business are bound.  Subject to your state law, it is best to create an operating agreement that specifically addresses the particulars of your business.  A local entrepreneurial or business attorney can help you to execute a relevant and effective agreement.

You do not need to file your operating agreement with your state.  Maintain it among your essential LLC records.

6. Licenses:
Acquire any licenses required for your business.  Determine these through local and industry-related searches, or seek help from a local attorney.  Comply with all rules and procedures.

7. Other Regulatory Requirements:
Determine whether you have other compliance obligations.  Search state and federal business databases for this information, and comply with applicable rules, regulations, and procedures.  For example, your business may be subject to environmental laws, federal import or export laws, state labor laws and workers’ compensation laws, federal securities laws, or laws specific to your industry or endeavors.

8. Federal Tax Registration
Apply for your EIN. [2]

9. If Desired, Make any applicable Tax Treatment Election:
If you elect to be taxed as a C- or S-corp, you may generally specify that the election become effective between seventy-five (75) days before and twelve (12) months after the date you file the election.

Use Form 8832 to elect to be treated as a C-corp. [3]

Use Form 2553 to elect to be treated as an S-corp. [4]

If a single-member LLC electing to be treated as a disregarded entity, make no formal election.  This is the default.

If a multi-member LLC electing partnership taxation, make no formal election.  This is the default.

10. State Tax Registration:
Register your business with your state revenue department, and obtain any required state tax identification numbers.  Your state may require additional registration actions upon the hiring of any employees.  Consult your applicable rules.

Post Formation Requirements

11. Annual State Business Filings:
LLCs must generally file annual reports with the Secretary of State, and pay corresponding fees and charges.

12. Required Internal Formalities:
Most states require LLCs to maintain company records, and to make company information available to members.  Consult your state act regarding additional formalities.  Comply with all governing requirements provided by your state and any applicable operating agreement.


[1] Your name should be unique to help to generate individual brand identity, avoid infringing others’ rights, and comply with state law.

[2] You can do this online through the IRS website: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online.

[3] http://www.irs.gov/pub/irs-pdf/f8832.pdf (instructions are included at the bottom of the form). 

[4] http://www.irs.gov/pub/irs-pdf/f2553.pdf; instructions available at:  http://www.irs.gov/pub/irs-pdf/i2553.pdf.