How to Form LLC/Corporation in USA

As the market environment has evolved over the years, new business structures have emerged. This article will focus on Limited Liability structure in USA

Starting a Limited Liability Company (LLC) in the United States is a popular choice for entrepreneurs looking to protect their personal assets while enjoying the benefits of a flexible business structure. An LLC combines the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership. Here’s a step-by-step guide to help you navigate the process of creating your own LLC.

Step 1: Choose a Name for Your LLC

Before you set up your limited liability company (LLC), it’s important to select a name for your business. The name must comply with state regulations, which typically require:

The name must include “Limited Liability Company,” “LLC,” or “L.L.C.”
It must not be similar to an existing business name in your state.
It cannot include restricted words (like “bank” or “insurance”) unless you meet additional requirements.

While the name you register for your LLC can be the same as the one you use in your operations, many businesses choose to operate under a different name known as a “doing business as” (DBA) or trade name. This allows for greater branding opportunities and can help distinguish your public identity from the official registered name of your LLC. If you’re doing business under a different name, you’ll probably need to register a DBA name in addition to filing your articles of organisation. Not every state requires this, so check with your state to find out its policies.

Step 2: Designate a Registered Agent

A registered agent is an individual or business entity authorized to receive legal documents on behalf of your LLC. Most states require businesses that are LLCs to appoint one person as a registered agent. This agent must be located in the state where your LLC is formed.

Criteria for a Registered Agent:

Must be at least 18 years old.
Must have a physical address in the state (P.O. boxes are not acceptable).

Step 3: File the Articles of Organization

The next step is to file the Articles of Organization with your state’s Secretary of State office. This document officially establishes your LLC and typically includes:

LLC name and address
Registered agent’s name and address
The purpose of the business
Information about the LLC members

The cost to file Articles of Organization varies by state, usually ranging from $50 to $500. Check your state’s website for specific fees and processing times.

Step 4: Create an Operating Agreement

While not required in every state, an Operating Agreement is a crucial document that outlines the management structure and operating procedures of your LLC. It serves as a roadmap for your business and helps prevent conflicts among members. It will not be required in case of corporation formation.

Key Components of an Operating Agreement:

Member roles and responsibilities
Voting rights and decision-making processes
Profit and loss distribution
Procedures for adding new members or dissolving the LLC

Step 5: Obtain Necessary Licenses and Permits

Depending on your business type and location, you may need various licenses and permits to operate legally. Research local, state, and federal requirements for your industry. Common licenses include Business licenses, Sales tax permits and Professional licenses

Step 6: Get an EIN

In order to pay taxes as a limited liability company, you’ll need to obtain a federal tax ID, known as an employer identification number (EIN). This is your business’s version of a Social Security number. You can obtain an EIN for free from the IRS, either online or by submitting Form SS-4.

Step 7: Open a Business Bank Account

Now that your LLC is established as a separate legal entity, it’s crucial to set up all the necessary financial systems to keep your business operations distinct from your personal finances and those of other members. The top priority should be opening a business bank account, which will serve as the central hub for your LLC’s financial activities. This step is essential for maintaining clarity and protecting your personal assets.

Step 8: Stay Compliant with Ongoing Requirements

Once your LLC is established, it’s important to remain compliant with state regulations. This may include:

Filing annual reports
Paying annual fees
Keeping up with any changes in state laws that affect LLCs

How Acebooks Can Help

Acebooks makes it easy to incorporate and launch your company, so you can quickly start charging customers, building your team, and securing funding.

Fill out details in Acebooks form in less than ten minutes. Then we’ll incorporate your company for you in selected state. Also, we will help you in deciding the state for incorporation considering the tax implications.