Archive for July, 2009

Starting an LLC

An LLC or a limited liability company is a new concept in business in the United States that gives businesses more flexibility and tax advantages than ever before. In addition, an LLC also enjoys the benefits of a corporation or a proprietorship business. It is a separate legal entity limiting the liabilities of each member in the organization. Presently, it is found to be one of the most popular ways to incorporate business. The LLCs enjoys various benefits like freedom from preparing annual reports, director meetings and also shareholder requirements. Apart from these, an LLC also has major tax benefits as compared to that of a corporation.

LLC and the articles of organization
To start an LLC you need to file the articles of organization and consider this as your first priority. These articles of organization are formulated under the federal laws and are filed with the office of the secretary of state. To file these articles, you are required to complete forms with details of your organization like its legal name and registered office address, the names of the board members, their contact details, stocks maintained by your organization, and the purpose for which the organization has been built. The filing fee generally ranges from $30 to $200 depending on the nature of business you are conducting.

LLC and the operating agreement
Another important document to be completed while starting your LLC is the operating agreement. This spells out the details of your business arrangement, the percentage of ownership of the members of your organization, roles and responsibilities of the officers, the rights of the employees and the board members. This operating agreement can help you during any legal issues challenging your business as it has been formed according to state laws.

LLC and the taxation policies
Before starting an LLC you need to justify the tax benefits that you would be getting after forming your organization. The annual fees and tax amounts are higher in various states in the US, so you need to calculate the profit and loss percentages of your organization. Some states rules have changed though; including annual fees and taxes, diminishing the economic advantage of your organization. So, before you form or transfer your existing business to an LLC, you need to be informed about these annual fees and taxation policies.

LLC and registration
A very important part when forming an LLC is registering your organization under the secretary of state, making it a legal entity. As the name of an organization is one of the most important assets, you need to register your company’s name under local and state laws.

LLC formation: How to form an LLC in different US states

A limited liability company is a business structure that is very similar to that of a corporation. The difference between these two is that the liabilities of a limited company are much less than that of a corporation. In the United States, limited liability companies are new ways to help small business owners and employees gain the major benefits by owning corporations. A limited company does not have shareholders and they are not required to meet at shareholders meetings. The following are some of the common steps to form an LLC in different US states:

Choosing a proper name for your LLC
To form an LLC in any of the US states, the first thing to be done is to choose the name of your LLC and be sure that it complies with the rules of the particular state’s LLC division. The name has to be different than any other LLCs filed and also must end with an LLC designator. Until you file the articles of organization, you can reserve a name for your LLC for a limited period of time.

Need to file articles of organization
The LLC filing office demands the articles of organization from your company once you are done with the name of your organization. There are some basic documents that are required to file the articles of organization also known as the certificate of formation or certificate of incorporation.

Filing fees while submitting articles of organization
To submit the articles of organization, you are required to pay a filing fee. This can be considered one of the small disadvantages of forming an LLC compared to a partnership business or a sole proprietorship. The minimum fee that is charged by most of the states in the United States is around $100.

Required Registered Agent
A registered agent is very important for forming an LLC in the United States. The name and address of this person, usually a member of your LLC, has to be registered under state laws in the LLC filing office who will act as an ‘agent for service of process’ for any future lawsuit involving your LLC.

LLC operating agreement
The state laws demand that an LLC operating agreement must be prepared embodying the rules for the ownership and operation of the business. This is not filed with the LLC filing office.

License and Permits for an LLC
The license and permits are the last but most important step in forming an LLC in the United States. This generally includes the business license, tax registration certificate, a seller’s permit, a federal employer identification number and a zoning permit.

LLC Formation Services

To form an LLC or a limited liability company, the prerequisites are preparing articles of incorporation, operating agreement, bylaws, tax exemption files etc. There are various service providers that offer these services and prepare necessary documents for you that are able to deal with the local and state laws.

An LLC includes laws that protect you and the members of your organization with limited liability protection, lessen your risk of tax audits. Some of these service providers’ fees for completing documents for your LLC can range between $99 and $399.

Unlimited name search opportunities
While forming an LLC, you need to remember that the name you choose for your organization needs to be a unique one. This should be searched beforehand through the secretary of state filing office. Most of the service providers give you the opportunity to search for the desired name for your organization. The unlimited search option enables you to find the perfect name for your organization. The numerous online service providers have made things easier for you to do.

Legal Advice
To start your LLC you need to understand some of the requirements of your local and state laws under which you are forming your business. The preparation of documents such as articles of organization and operating agreement need to include details of your business and also sets up rules for your organization. These experienced service providers usually supply technically sound advice to help you in preparing all important documents required by your organization. Attorneys provided by notable service providers will assess your overall business plans and will also make sure that the legal structure takes into account your present circumstances and financial situation.

Electronic copies of LLC official formation document and EIN obtainment
The LLC formation service providers also allow you to get the electronic copies of all the legal documents prepared by them. This is included with the charges for their preparation services. These documents are generally emailed to the customer within a single business day.

In addition to this, the LLC formation service providers also get your federal Employer Identification Number (EIN) within a single business day after the formation of your limited liability company. This number identifies you as the sole owner of the organization and gives you certain facilities provided by the federal laws.

Tax information
The online service providers can supply you with required tax information for incorporating your limited liability company, tax exempt information and also tax saving advice, rules and policies of the local and state government.