How to Form an LLC
Limited liability companies (LLCs) are easier to create than corporations -- and forming one may be the best thing you can do for your business.
Forming an LLC (limited liability company) is not as hard as most people think. Here are the steps you need to take to make your LLC a legal reality.
- Choose an available business name that complies with your state's LLC rules.
- File formal paperwork, usually called articles of organization, and pay the filing fee (ranging from about $100 to $800, depending on your state's rules).
- Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
- Publish a notice of your intent to form an LLC (required in only a few states).
- Obtain licenses and permits that may be required for your business.
Choosing a Name for Your LLC
The name of your LLC must comply with the rules of your state's LLC division. (Typically, this office is combined with the corporations division, and is part of the secretary of state's office.) While requirements differ from state to state, generally:
- the name cannot be the same as the name of another LLC on file with the LLC office
- the name must end with an LLC designator, such as "Limited Liability Company" or "Limited Company," or an abbreviation of one of these phrases (such as "LLC," "L.L.C.," or "Ltd. Liability Co."), and
- the name cannot include certain words prohibited by the state, such as Bank, Insurance, Corporation or City (state rules differ on which words are prohibited).
Your state's LLC office can tell you how to find out whether your proposed name is available for your use. Often, for a small fee, you can reserve your LLC name for a short period of time until you file your articles of organization.
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