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How to set up an LLC

To form an LLC, you must choose a business name, file articles of organization, and obtain all licenses and permits.

An LLC, or limited liability company, is a common type of business structure. It provides more protection for its owners than a sole proprietorship or partnership. Before you get started, learn the basic steps of how to set up an LLC.

1. Choose a business name

Your business name should be unique and cannot be the name of another business in your state. Make sure your name meets all state requirements for choosing a name. For instance, you might be required to use the term “LLC” in your name, or some other abbreviation to notify the public what type of company you are. The laws might also prohibit you from using certain words.

You should be sure that your business name does not infringe on another business’s trademark. Even if your name is not the same as another business name, a similar name or brand could qualify as trademark infringement.

2. File articles of organization

The articles of organization are a document that officially creates the LLC. Articles of incorporation are also known as a certificate of formation or certificate of organization. For this document, you may also have to designate a registered agent. A registered agent is served with process if anyone were to sue the company.

3. Create an operating agreement

An operating agreement outlines the rules for how a business is owned and operated. While having an operating agreement is not usually a state requirement, it is a good idea. The operating agreement will help manage the rights and obligations of everyone who is involved in the company, and will help you stay organized in the long run.

4. Obtain required licenses and permits

Most states require a business license in order to operate. In fact, you may need multiple business licenses and permits, depending on what kind of business you run and your location.

Common types of business licenses are city business licenses, zoning permits, or professional licenses. You may also need a federal Employer Identification Number (EIN). The federal government uses your EIN to identify your business for tax purposes. If you have employees or file excise taxes as an LLC, then you must obtain an EIN.

5. Consult a lawyer

Business lawyers can answer any questions you have about the process of forming an LLC. An experienced lawyer can also help you gather anything you need in order to set up an LLC, and can discuss your options with you for what type of business structure is right in your particular situation.

Learn more about how to start an LLC

  1. How to start a single-member LLC

  2. How to form a multi-member LLC

  3. Weighing the benefits of LLC formation

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