Are you planning to start a business? If so, you might be thinking of forming an LLC/Limited Liability Company. It’s an ideal way to safeguard your assets by restricting the liability to the resources of the business itself.
For those who don’t know, an LLC is a business entity that is much like a corporation. Similar to a corporation, it can set out personal liability protection for its owners, called “members.” However, a limited liability company is more flexible in terms of managing tax and allocating profits and losses. This is the primary reason most small entrepreneurs prefer to form an LLC.
Moreover, since a limited liability company has its own bank account and assets, it can sign leases and contracts.
Though you can set up an LLC yourself, it is advisable to get professional help. After all, the process involves dealing with a lot of legal matters, and a small mistake may cause big trouble in the future.
LegalZoom is a reliable legal service out there that can help you with the entire LLC filing process, tax streamlining, and legal matters.
Check out below how you can set up an LLC with LegalZoom.
Step 1: Choose an LLC Name
The first step in forming a limited liability company is to pick a specific name for your LLC. Make sure the name you’re choosing is available in the state you’re operating in.
LegalZoom provides a search tool on its website to help you check the availability of your desired name. The tool performs a state-wide search to find out whether or not your selected name is available.
Below, we have put together some tips to choose the name for your LLC company.
- Don’t choose a name that is similar to an existing LLC in your state. LegalZoom will check this for you.
- Avoid adding restricted words like “insurance” or “bank.” You can check your Secretary of State’s website for a list of restricted terms.
- Don’t choose the name that has a negative meaning in English or another language.
- Don’t go for a name that is already trademarked. You can perform a trademark search on the USPTO website.
- Avoid choosing a name that is specific to a location, especially if you already have an idea to expand in the future.
Step 2: Define The Purpose of Your Company
The business purpose determines the reason for your company’s existence. Though most US states require a general statement of purpose, some may ask you to specify it in a legal language.
LegalZoom helps you draft the purpose that meets the specific legal requirements of your state.
Step 3: Define Whether You Will Hire Employees
All LLCs that recruit workers have to apply for EIN (Employer Identification Number) through the IRS to define tax and payroll obligations. So, if you’re planning to hire employees, get an EIN so that the IRS (Internal Revenue Service) can recognize you. It will also help you meet all the tax obligations and carry employees’ compensation insurance without a struggle.
LLCs that don’t want to hire employees can use their Social Security number for tax purposes, but since EIN gives you protection against various security issues, you must get it.
LegalZoom makes sure that you’re eligible to apply for an EIN online. It assists you in filing the required documents and getting EIN via the IRS’s online application process.
Step 4: Get a Registered Agent
The state dispatches essential documents like tax notifications and summons to registered agents only. Therefore, you need to look for a legitimate agent within your state’s boundaries who can collect valuable documents for you.
If you live out of state, you can ask your friend or business partner to become a registered agent, hiring a professional is a good option. Having a reliable contact for your business will ensure you’re not missing any important deadline or documents.
You can get a registered agent from LegalZoom. Moreover, the company will help you keep all of your legal resources in one place.
Step 5: File Necessary LLC Documents
The procedure for forming an LLC may vary depending on the state you are operating your business in. However, in general, an entrepreneur must register the following documents and information:
- The complete name and address of the LLC.
- The purpose for which the company was established.
- The name and address of the registered agent.
Additionally, you may also need to show an operating agreement to define the structure of your company. LegalZoom can help you get all the essential documents for nominal charges.
Step 6: Draft an Operating Agreement for your LLC
An LLC operating agreement is a blueprint that outlines how your company will run. The agreement describes things like ownership interests, distribution of profit and loss, member’s right to vote, and how meetings will be organized within a company.
Some US states don’t require an operating agreement. However, a company must define its rights and accountabilities to avoid any disagreements in the future.
The good news is, you can draft an operating agreement for your LLC via LegalZoom for only $99. You can buy this agreement via your online account while applying for an LLC.
Step 7: File EIN
As mentioned above, if you hire employees or choose to pay tax as a corporation, you will need an EIN. You can get your EIN number from IRS or ask LegalZoom to apply it for you.
LegalZoom helps you draft the operating agreement and get an EIN for $159. It is a good option if you want to avoid filing the confusing Form SS-4.
If you’re not sure whether or not you need EIN, you can read the guidelines given on the IRS’s official website.
Once all your documents are filed and approved, your state will issue a certificate that will confirm the existence of your LLC.
LegalZoom has different packages for setting up an LLC, ranging from $79 to $349. You may have to pay additional charges for filing fees and add-on service. Depending on the package you choose, you can get your company registered for LLC within 7 to 30 business days. To know more about LegalZoom and its services, you may visit its official website.