How To Set Your Business Up As An LLC

As a founder, you have to understand that your startup’s business structure has important tax and legal implications. The limited liability company (LLC) is one of the most popular business structures because of its numerous advantages. It offers liability protection for its owners, who are known as “members”, within a flexible, and easy-to-manage structure. LLCs are allowed under state statute, so there are differences in terms of regulations, but broadly, I can give you guidelines that will help you set up your business as an LLC.

Choose a Business Name

The first step is to decide on a business name. For branding purposes, you want a business name that is as simple as possible, as well as memorable. You want a business name that communicates your business values and that consumers can identify with.

It’s also important to protect this business name, so that it cannot be used by other businesses, thereby diluting your brand and possibly even destroying its value.

To protect your business name, you have to register it using four different ways. Each way serves a distinct purpose, and some may, depending on the state, be legally required.

Entity name registration gives you statewide protection and can typically be done with the Secretary of State’s office.

Trademark registration with the United States Patent and Trademark Office provides federal-level protection. You have to check with the trademark database first to see if anyone else hasn’t already registered the trademark you want.

Getting a Doing business as (DBA) does not grant you any legal protections, but it is required in some states.

Domain name registration protects your business’ domain name. Consult a directory of accredited registrars to see which firms you can use to do this.

Although you can use the same name for all ways, this is not a legal requirement, although it is better for brand coherence.

Get a Registered Agent

It is a legal requirement for you to designate a registered agent. This is a person who is designated as the official recipient of all legal or otherwise official documents on behalf of a business. This person is responsible for passing on these documents to you. By law, once your registered agent has received the documents, it is as if your business has received them. So, this person or company has to be available at all times during the business day, and be reliable and trustworthy. A business such as Platinum Comfort Solutions can set up with a registered agent just like any other business.

File Articles of Organization

The articles of organization have to be filed with the Secretary of State or the agency responsible for registering new business in your state. In other states, this document is referred to as the “certificate of formation”. You get the form on the website of the Secretary of State or the business registration agency in your state.
You will have to provide basic information such as your business’ name, the street address of your business’ headquarters, your business’ purpose, the management structure of your business, your registered agent’s contact information and the duration of the LLC.

One of the members of the LLC must sign the form on behalf of the LLC. In a few states, such as New York and Nebraska, you will have to publish a notice in a local newspaper before your LLC can be registered.

Filing fees range from $40 to $500 in most states, with the average cost being $132.

Once your LLC has been registered, you will be issued with a certificate.

Draft an Operating Agreement

An operating agreement details all the legal, management and financial rights of the members. So, for instance, it will show how profits will be distributed, the capital contribution ratios, and how members can leave the business.

Although many states do not require an LLC to have one, it is very important to have one nonetheless. It will give everyone in the business clarity about how the business will be run, what rights they have and what their expectations should be. Relying on tacit understandings leads to future conflict even among the closest of friends and family, simply because it is so easy to arrive at different conclusions of what an agreement actually is. Having a piece of paper everyone can refer to is good for all. This is true even of single-member LLCs: having an operating agreement will articulate to yourself just how you are going to run your business.

Although you can get a free operating agreement online, it is probably best to see an attorney and have an operating agreement drafted that reflects what your situation, aims and views are in the best way possible.

If you follow these steps, you will be able to set up your business as an LLC and begin your journey as an entrepreneur.