Forming a Limited Liability Company or an LLC is probably the most important step before the inception of your business. US LLCs are entrusted legal entities for business among resident and Non-resident US entrepreneurs.
An LLC is the most opted-for channel for starting a business because of the perks and advantages incorporated in the judicial and tax codes. An LLC is essentially a hybrid between a corporation and a partnership. It protects the assets of the owner and extends limited liability, along with tax benefits.
Setting up and incorporating LLCs are easy. Hence, the start-up and maintenance are fairly straightforward and under a low budget. A majority of Non-resident Entrepreneurs look forward to this form of business ownership. A US-Based LLC opened by a non-US citizen or non-resident can allow for earnings, that are absolutely tax-free.
In this article, we will walk through the guidelines for registering and forming a Limited Liability Company in a few steps.
- Decide on a State/location of the LLC
Laws pertaining to the existence of LLCs are different. However, there are these metrics, that can help you evaluate the feasibility and ease of opening up an LLC in any one of the fifty states of the US.
- LLC formation cost is a one-time fee paid to the state to form your LLC
- An ongoing fee is paid to the state to keep your LLC in good standing, that is the annual franchise tax. Failure to pay this fee results in the LLC becoming non-existent.
- Few states provide the opportunity for anonymous LLCs, where the owners of the LL are not disclosed publicly.
- While some states have more tax benefits than others, and few have pro-LLC business laws.
2. Find a suitable name for the Business
Finding a suitable name for the business is critical. The name should be fulfilling your needs as an entrepreneur as well as in correspondence with the requirements of the law. Any state would have few restrictions on assimilating a few specific words, and adding LLC to the end of the name might not be an open option but mandatory.
3. Assign a Registered Agent
Someone who receives official or legal documents on behalf of the LLC, is a Registered Agent for the LLC. Designating a Registered Agent is crucial. Any person who is above the age of eighteen years can be a registered agent. There is no exclusivity in the idea that the owners of the LLCs cannot name themselves as registered agent. However, the registered agent must be available at an address within the state of the LLCs’ location.
4. Get An EIN- Employee Identification Number
The EIN is a unique nine-digit number assigned to your business by the Internal Revenue Service- IRS for tax purposes. Having an EIN is nonnegotiable when opening a nack account or applying for the merchant accounts with payment platforms.
5. Get the desired state’s LLC Article of organization form
The Article of Organization is a document that you would need to prepare and file to establish your LLC as a legal entity. This is done with the state agency that handles business filings in your state. While in most states it is referred to as Article of Organization, some states refer to it as the certificate of formation.
Each State has its own specific requirements and procedures for the formation of an LLC
- Name of the business
- Address of the business
- Purpose of the business
- Management and Registered Agent of the LLC
Some states like Nebraska and New York, require you to publish a notice in the newspaper indicating your desire to register your LLC, which is done before filing the articles of organization.
6. File the Article of Organization
Post proper research and keeping all documents ready in alignment to the State’s requirements, you are all set to file for the Article of Organization. Thai comes along with a filing charge. After the state approves the LLC, you will receive the certificate.
7. Open a US bank account
For finances backing the operations of the LLCs, you need to associate the company with a bank account. Which also requires the EIN.
8. Create an operating agreement
An Operating Agreement is a document that contains all details of the financial, legal, and management rights of all the members of the LLC. That would also include details about the distribution of the profits, dispersal of a member of the LLC and capital investment.
This document requirement is subject to the State’s legislation. LLCs with more than one member or partner will want to create one to ensure everyone agrees on their rights and responsibilities. Even solo business owners will benefit from outlining the details in writing.
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