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How To Form An LLC

Aug 17, 2007
A Limited Liability Company or LLC is a mixture between a partnership and a corporation. An LLC protects the owners from personal liability on the company's debts just like a corporation with the tax-benefits of a partnership or a proprietorship firm. Below are strategies to help form a limited liability company.

The Steps To Take In Forming An LLC
1.Company's Name: Choose a company name to form the LLC. The name must meet the regulations of different states. The LLC office can check if the company's name is valid. The owner can reserve the valid Limited Liability Company's name temporarily for a small fee until signing the articles of organization.

2.Trademark: Follow the state's rules for establishing a trademark.

3.Number of LLC Members: The minimum number of people required to form an LLC is one. There is no set limit to the number of LLC members. From the business and technical feasibility angle, it is best to keep the number of members as low as possible.

4.Registered Agent: A registered agent or agent for service of process is a person, who is authorized to receive all the legal papers for the company. The agent must be one of the LLC members.

5.Filing the Articles of Organization: File the articles of organization, also known as the certificate of organization or the certificate of formation, with your state government's LLC department. The LLC division is generally a part of the corporations department and the corporations department belongs to the Secretary of the State's office. The article filing form requires the basic details, such as the name and address of the LLC, the contact information of the registered agent, the contact information of the members of the LLC and the updated dissolution date of the LLC. The fees for filing the articles range between $40 and $900, according to the state's policy.

6.LLC Agreement: An LLC agreement lists all the details about the organization, including the general management of the LLC, information about its members their roles and responsibilities, their voting rights, their percentage of share in the business, their individual degree of profits, and the buying and selling rules. It is a key document that maintains the clarity of the situation when running your business. The LLC agreement may be formed prior to or after the filing of the articles of organization. The agreement may be written or verbal as agreed upon by the majority of the members.

7.Local Registration: For the local registration of an LLC, the owner needs to fulfill the prerequisites, such as getting a business license, getting a tax registration certificate, getting a seller's permit, getting a zoning permit and registering the LLC company's name. The company's name is registered once the owner files the articles of organization.

Additional Help
Many reliable software packages designed by trusted companies are available in the market today to help with the documentation process during the formation of an LLC. These software packages form the articles of organization and aid in drafting a company's LLC agreement. This software abides by the updated states' regulations for forming an LLC. Many eminent software companies also provide online interface for filling out the various forms required at different levels when forming an LLC.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their
web site http://www.smallbusinessconsulting.com
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