A limited liability company is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Obtaining an LLC for your business is a relatively simple process contained in these four steps:
Step 1: Choose a name for your business, and fill out a copy of your state’s LLC articles of organization form. Set up your LLC in the primary state in which you’ll be doing business.
- Your business’s name should comply with state rules and should end with an LLC designator.
- The articles of organization form is available at your state’s Secretary of State website and office. When filling out the form, name all initial members of your company.
- Find out if your state requires a press release to a local newspaper.
Step 2: Release a notice to publications announcing the formation of your LLC.
- Some states require a press release to local publications, but even if not required, a press release is always a good idea to inform the public that your company is about to launch.
Step 3: Submit your articles of organization form.
- Send this document to your Secretary of State along with any filing fees and annual corporate taxes.
Step 4: Create an LLC operating agreement.
- While an operating agreement is often not legally required, establishing a trustworthy relationship with your business partners is paramount to the success of your LLC.
- Consider negotiating the details of your operating agreement before filing your articles of organization form.
Your company needs a federal tax ID if your company pays employees or operates as a corporation of partnership. A federal tax ID is necessary to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits.
Your employer identification number is your federal tax ID and is necessary for your company to pay federal taxes, hire employees, open a bank account, and apply for business licenses and permits. Applying for an EIN is free, and you should apply immediately after establishing your LLC.
If you already have an EIN, you should consider changing it for the establishment of your new business. Application for an EIN is a relatively simple process accessible with the EIN assistant on the IRS website.