How to Form an LLC
I am writing this post about how to form an LLC (limited liability company) because of a question that I answered on Quora. Please see What are the basic requirements for forming of a LLC in US?
The following is an overview of the steps required to form an LLC properly in the U.S.:
- Choose the state in which you will form the LLC. It typically makes the most sense to form the LLC in the (principal) state where it will be doing business.
- Choose a name for the LLC that complies with that state’s requirements. That name must not be the same as, or confusingly similar to, the name of an existing LLC in that state.
- Determine who the members (equity holders) will be, whether there will be multiple classes of membership interests, the amount and nature of each member’s capital contribution, and the members’ respective voting rights.
- Determine whether the members, or one or more managers, will manage the LLC.
- Select a registered agent (or, in California, an agent for service of process) for the LLC.
- Complete the required formation document (Articles of Organization, Certificate of Formation, etc., depending on the state).
- Submit that formation document to the state and pay the required filing fee. (While some states permit this to be done online, others require hard-copy filing.)
- Obtain a federal Employer Identification Number for the LLC.
- Prepare an Operating Agreement (OA); have the members and the managers sign it. (If there is no OA, state law will govern. However, it is better to have an OA that expressly states the parties’ rights, obligations and expectations.)
- Issue membership interests to the members.
At this point, the LLC is ready to conduct business and to make any further governmental filings that will be required for it to do so.
Check out all posts about LLC formation.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.