Steps to Form an LLC

Take these steps to form a limited liability company, or LLC.

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1. Choose an LLC name.

The name of your business cannot be the same as the name of another limited liability company (LLC) on file with your state's LLC office (which is usually part of the same division as corporations, often the Secretary of State's 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 ("LLC," "L.L.C.," or "Ltd. Liability Co.").

Your state's LLC office can tell you how to check if your proposed name is available for your use.For a small fee, you can usually reserve your LLC name until you file your articles of organization. For more information, contact your state's LLC office or see Choosing a Business Name FAQ.

2. File articles of organization.

Prepare and file "articles of organization" with your state's LLC filing office. Typically, you must provide only your LLC's name, its address, and sometimes the names of all of the owners -- called members.

Some states (including Delaware, Mississippi, New Hampshire, New Jersey, and Washington) use the term "certificate of formation" instead. Two other states (Massachusetts and Pennsylvania) call the document a "certificate of organization." For help filing this document, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo). Or, to form your LLC online right now, use Nolo's Online LLC.

3. Create an LLC operating agreement.

The LLC operating agreement contains rules for the ownership and operation of the business (much like a partnership agreement or corporate bylaws). A typical operating agreement includes the members' percentage interests in the business, the members' rights and responsibilities, and information on voting, management, and profits and losses. For more on LLC operating agreements, read The LLC Operating Agreement.

4. Publish a notice (AZ and NY only).

This step does not apply to LLCs in most states. If you are forming an LLC in Arizona or New York, you must take an additional step to make your company official: You must publish in a local newspaper a notice stating that you intend to form an LLC. Your local newspaper should be able to help you with this filing.

5. Obtain licenses and permits.

Before you begin doing business, you need to obtain the required licenses and permits that anyone needs to start a new business. Among the licenses and permits you may need to obtain are a business license and, if your LLC will sell products, a seller's permit. For more information, see the Obtaining Licenses and Permits section of Nolo's website.

6. Retain your limited liability.

To retain your LLC's status as a separate entity, LLC owners (members) must observe certain formalities, such as keeping detailed financial records and recording minutes of major decisions. For more information, including minutes forms, consent forms, and over 80 resolutions, see Your Limited Liability Company: An Operating Manual,by Anthony Mancuso (Nolo).

To form your LLC right now, use Nolo's Online LLC, which will collect the required information and file your articles of organization with your state.

by: , J.D.

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