More and more people today are thinking of starting their own business and being entrepreneurs. Limited Liability Company (LLC) offers the owners an easy way to set up business and also gives protection against creditors.
The first task one needs to do while setting up a limited liability company is to think of a name for the company. The name of the company should not only describe the purpose and objective of the company but also should be a legal name according to the state rules. Some of the issues to be kept in mind before finalizing a name are firstly it should not be same as the name of another LLC on the file or with the LLC office.
The company name should end with words such as “Limited Liability Company” or “Limited Company,” and should not include words like, Insurance, Corporation or City which are prohibited by the state. Above all this it also has be kept in mind that the name of the company decided upon should not violate any other company’s trademark.
Once the name of the LLC is finalized one needs to fill the Articles of Organization with the State. This is a simple process and one can easily get it from the Secretary of State’s website or a local office. It is a simple document containing information like the name of the business, purpose of the business, membership officers and place of business.
The only disadvantage of forming an LLC rather than a partnership or a sole proprietorship agreement is that a small filing fee is required to be submitted along with the articles of organization. The fee amount depends on the state one is registering the company into. For the state to approve the application it can take a few weeks time.
Next one should make a LLC operating agreement. Even though it is not necessary it is always preferable to make one. It mainly includes information relating to the day to day running of the business like members percentage interests in the business, their responsibilities and rights, voting powers, how the profits and losses will be allocated and overall how the business will be conducted. Once all these formalities are done the only thing left is to obtain licenses which need to be obtained for any other business as well.