Limited Liability Company (LLC) is probably the first choice of any entrepreneur while forming a business in the United States. The reason behind this is that start-up companies could benefit themselves with several advantages including tax benefits.
Although LLC is one of the most popular business structures in the United States, the formation process might get a bit complex for entrepreneurs or non-US citizens.
Well, if you are also interested in starting your LLC but unaware of the LLC formation documents in 2024, then reading this article will clear your way and help you start your dream business in the United States.
1. Business Name Registration
The very first document you would require to form an LLC is to register your business name. To file a business name registration, you must choose your business name and run an availability search on the particular website of the secretary of state or corporations bureau.
It is because you are not allowed to use the same business name that has already been used by another business in your state. Similarly, while choosing the business name, you would be required to include the terms “LLC” or “Limited Liability Company” at the end of your business name.
After booking your business name, you have to register a business name by creating the applicable formation documents with the applicable state agency.
2. Articles of organization
Articles of organization, also known as “certification of organization” or “certification of formation” an essential LLC formation documents that are filed with a state government.
The document is filled with basic company information such as:
- Company Business Name: After registration of the business name, you shall include the name in the articles of organization.
- Business type (i.e., “LLC”)
- Primary business address: You should place the physical address where your business operation is located. The location must be inside the territories of the United States.
- Ownership: While filing articles of organization you shall include all the members of your company with full contact information. Also, it is necessary to indicate the amount of share of each business owner.
- Name and address of Registered Agent: Registered agents are the ones with a physical mailing address and local contact information that holds the responsibility for processing the documents to the state officials. You can also select a registered agent of your friends or family members residing in the United States.
- Purpose of your business: You shall explain the specific purpose of your business that runs under the legal law of business activities.
- Duration of your LLC: You might also be asked to provide information if your business has a dissolution date. If there is no dissolution date, you can designate your agreement as perpetual.
3. LLC Operating Agreement
An LLC Operating Agreement is a written contract used by an LLC (Limited Liability Company) to define roles, responsibilities, and liability for the organization in a way that suits your business.
An LLC Operating Agreement commonly includes various sections:
Introduction: Gives a nutshell summary of the agreement and identifies the LLC it applies to.
Definitions: This section explains all important terms used in the paper just so that there is a common understanding between parties.
Formation Details: There are several facts about the creation of an LLC that you need to know like its title, main office location, purpose, and period these are included here.
Membership: It provides details on who forms papers of incorporation members of limited liability companies their respective shares capital contributed and interests held by them.
Management Structure: It specifies whether there is a member-owned or manager-owned firm whereby each leader’s job is provided for.
Voting Rights: These include provisions that describe how voting takes place about quota distribution between members and requirements for quorum and decision-making approval rates.
Profit and Loss Distribution: It explains how net profits/losses will be divided among the owners based on their shareholdings or some other agreed-upon basis.
Meetings and Record Keeping: Procedures for holding meetings, keeping records, and maintaining financial statements are outlined here to guide as needed thereafter.
Transfer of Membership Interests: Not everyone can become a member if he/she wishes. A transferability clause defines what restrictions apply others are free to change membership interest units. What happens if one wants out? How do they get out? What about partners leaving? Do they keep the company’s interest?
4. Employer Identification Number
An EIN Number (Employee Identification Number) is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses for tax purposes. This number is similar to a social security number for individuals and serves as a way for the government to identify and track businesses for tax reporting.
How to apply for an EIN?
- Apply online through the IRS website where you need to fill up an Internet EIN application (Only Support If you have SSN or ITIN )
- Apply by Fax filling up the Form SS-4. A Fax will be sent back with the EIN within four business days.
- Apply by Mail filling up the Form SS-4. The processing time via mail will take around four weeks.
- Apply by Telephone, international applicants can make a call on 267-941-1099 from (6 am to 11 pm).
Frequently Asked Questions (FAQs)
Is the Operating Agreement mandatory?
In every state, The Operating Agreement is not compulsory but it is strongly advised especially since it outlines a company’s day-to-day procedures and also gives the rights and responsibilities of members thus avoiding issues.
How much does it cost to form an LLC?
The cost of forming an LLC will differ depending on one’s location. It includes filing fees for the Articles of Organization, varying between $50 and $500. Other extra charges may include publication costs, annual or biennial reports, and fees for operating agreements.
Can I form an LLC myself, or do I need a lawyer?
Using online resources along with your state’s filing system you can form an LLC yourself. But if you want assistance in some situations like when you have multiple members or complicated operational needs a lawyer can be very helpful.
Can I change the structure of my LLC later?
You can modify your LLC structure by adding/removing members, amending the Operating Agreement, or changing your tax classification without any doubt. However, additional forms may need to be filed and fees paid to the state.
Nabin Adhikari
