Is It Easy To Form An LLC?

A general concern is the level of difficulty of forming an LLC. Do you have to spend exorbitant amounts of money on getting legal help, just to start your business, because it is simply too complicated to do by yourself? Here we will show you how simple the process really is, and how you are able to do it by yourself. 

The reason that the Limited Liability Company (LLC) is one of the most popular business types in the U.S.A is because it isn’t too difficult to form. The average-Joe is able to take control of his own business plans and start building his future. It doesn’t require thousands of dollars to start because there aren’t excessive legal processes which take both time and money.

The process: Six Simple Steps

Most people find the prospect of starting any business a daunting process. Luckily, by following these easy steps, you’ll be surprised by how simple it really is to form an LLC and start operating your business. 

  1.   Decide on a state. 

The simplest way to start is to found an LLC in the state where you live and where you plan to have your business operations. Should your business have a physical element (such as storefronts, offices, or sales representatives) in numerous states, you do have the requirement to register a foreign LLC in every state where your business will operate in any way, shape, or form. It has been said that forming your business in states with business-friendly laws is beneficial, however, this is not always worth the additional fees and paperwork. It is simplest to stick to the state where you reside and where the business will operate. 

  1.   Name your business. 

To follow is the naming of your business. Depending on the state, there are various rules and regulations regarding names that are permissible. In general, there are three rules that need to be considered i.e. the name must include the phrase “limited liability company” or variations thereof such as LLC, L.L.C; the name cannot include words that could be confused with government agencies e.g. FBI, Treasury, or State Department; there are restricted words (e.g. Bank, Attorney, University) which may require further documentation and licensed individuals as stakeholders. 

  1.   Assign a Registered Agent. 

After you have taken the necessary steps and named your business, you are obligated to nominate a registered agent. For more information on who to choose as a registered agent, follow this link: This individual or corporation has the purpose of sending and receiving legal documentation on behalf of your business. These documents include, but are not limited to, legal summons and formal documentation which will be sent to you by the registered agent upon their receiving it. This is considered mandatory by most states, and the registered agent that you choose has to be a resident of the state where your business operates or the corporation must have the legal right to perform business duties in that state. 

  1.   File a Formation Document. 

Now it’s time to file a formation document with the state in order to formally found the LLC. The document is most often referred to as the Articles of Organization. However, depending on the state where your business will be operating, could also be referred to as the Certificate of Formation or the Certificate of Organization. 

  1.   Create an LLC Operating Agreement. 

To follow, you need to create an LLC operating agreement. This is a legal document that sketches the ownership structure and the member roles. This is useful to have, even if most states do not consider it formally obligatory. There are six primary sections which the document will cover, namely: organization, management and voting, capital contributions, distributions, membership changes, and dissolution. The organization section defines when and where the business was started, states the members of the business, and outlines the manner in which ownership is shared. Management and voting talks about the management of the business and the manner in which the members get to vote. Capital Contributions states which of the members are financial backers of the business, and it sketches how future funds will be acquired. Distributions deal with the distribution of profits and losses amongst the members of the business. Membership Changes explicates how members may join or how members may be withdrawn from the company. More than this, this section discusses whether members may shift their ownership shares to others and how they may do. Dissolution describes conditions of ending the business. 

  1.   Get an EIN. 

Finally, should you wish to employ other individuals or open a business account, then it is necessary for you to acquire an EIN (Employer Identification Number). This number can most easily be compared to a social security number for your LLC. This number can be requested, at no cost to yourself, through the IRS website. Alternatively, you can obtain it via fax or by mail. 

Starting the LLC:

Should you require some extra help, TRUiC has an excellent guide on how to begin your LLC.