Setting your company up as a limited liability company (LLC) has a number of advantages. Chief among them is that under such a set-up, your personal assets cannot be used to pay for your business debts or seized as part of a legal settlement. Although the laws regarding LLCs vary slightly from state to state, there are a number of sets that are common to all 50 states. Knowing them will help you prepare well for meeting with your business attorney.
Five things you need to do in setting up an LLC
1. Choose a name. The name of your LLC needs to be unique from any other LLC business in your state. It also needs to include LLC in the name of the company and not use words that have additional restrictions in your state, such as "insurance" or "bank." You'll register your business name at the same time you register your business and get your business license.
2. File your Article of Organization. The Article of Organization is a standard form required by every state for Limited Liability Companies. This form outlines the basic contact information about your company as well as the names of the business members. Where you file this form does vary by state. In some states, you file with the Secretary of State; in others, it's the Department of Commerce or the Department of Consumer Affairs.
3. Write your operating agreement. Most states, but not all, require that you draft an operating agreement when you file your initial paperwork, according to the U.S. Small Business Administration. This document outlines your business hierarchy and how your business finances will be handled.
4. Get the necessary licenses and permits. Another step to creating your LLC is to get the permits and licenses required to operate your type of business. This includes the general business license as well as any special permits unique to your industry, such as a food and beverage license or liquor license.
5. Announce your business. The Small Business Administration also advises that many states require you to announce the creation of your LLC to the public in the local newspaper. Your attorney and the filing office will be able to tell you if this applies to your area.
While creating your business as an LLC isn't the right choice for every small business owner, this type of incorporation helps protect your personal assets from your business liabilities, has less record keeping requirements than an S corporation and offers fewer restrictions on how the profits of the business are shared among the principals. For more information on how to set up an LLC, check with a professional like those at Philip L. Burnett, Attorney At Law.