Starting a business is the dream for millions worldwide. However, only so many get to live that dream. One of the best ways to start your business is to form an LLC or Limited Liability Company. According to surveys conducted within the USA, around 35% of all registered businesses in America are registered as LLCs. However, most people do not know how to start an LLC and what it exactly is. In this blog, we will shed some light on this topic and will tell you what an LLC is and how to start it.
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What Is An LLC?
LLC, or Limited Liability Company, is a legal way to structure a business. It provides business owners with many benefits, including lower costs, fewer complications, and liability protections compared to corporations. LLC owners can choose how they manage and pay their taxes, which is why many businesses opt for LLC registration. Opening an LLC is not child’s play, but it is also not rocket science, and you don’t have to do much.
How To Start An LLC Easily
If you want to know how to start an LLC, follow the simple steps mentioned below and get started today. Although the rules and procedures might differ in different states, the basic criteria remain the same.
1. Choose A Name For Your LLC
The first step towards knowing how to start an LLC is to finalize a name for your LLC. However, you must remember that you comply with the LLC name rules in your state. LLC name rules vary in different states of the USA. However, most states require your LLC name to be:
- End with an LLC designation, such as XYZ limited liability company or XYZ limited company. You can also use just the abbreviation, like XYZ LLC.
- Your name should not be the same as that of an existing entity or business.
You can usually save your LLC name by paying a small fee until you file your articles of organization, which we will discuss in a second.
2. Get A Registered Agent
In the USA, every LLC must have a registered agent. A registered agent is an agent or a firm that deals with the legal proceedings of a company in case someone sues the LLC. The registered agent must have a physical address in the same state as the LLC. If you don’t want to appoint an outsider, an LLC member can also act as a registered agent. However, this can only happen if they have a physical address in the same state as the LLC.
3. File An Article Of Organization
The next step towards knowing how to start an LLC is to file an article of organization. You have to file an article of organization in your state’s corporate filing office. The name of the document may vary from state to state. However, the procedure remains relatively the same.
You can file this document online by visiting your secretary of state’s website and downloading it from there. To fill it, you will need to provide some basic details like your company or LLC’s name, the name and address of your registered agent, the physical address of the LLC, and the name of the LLC owners.
4. Get An EIN And Bank Account
After you have filed your organization article, your LLC will be officially established. The next step towards opening an LLC is to get an EIN or Employer Identification Number and a bank account.
The EIN number is a 9-digit number that identifies you as an employer and is generally used for federal taxation. You need an EIN number only when you have employees and more than one member in your LLC. If you’re your LLC’s only member and employee, you can simply use your social security number as your EIN.
Once you’ve set up your LLC EIN, you can use it to open an account in your firm’s name. You should use this account for all your company transactions, and it’s absolutely vital that you dont mix your LLC account and personal account for any company expenses.
5. Taxation, Permits and Other Legal Obligations
This is the last step to show you how to start an LLC. Once you’ve set up your LLC, the next thing to take care of is all the permits, taxation, and legal obligations. Start by determining what kind of LLC you want. A few examples are single-member LLC and Multi-member LLC. The type of LLC you choose will determine your tax, as the IRS has no fixed taxation policy for LLCs.
Also, you have to get permits to start your business. A few permits that you must have for an LLC include the following:
- Seller’s Permit
- General Business License
- License Specific To Your Industry
- Register In Other States( If Required)
Start Your LLC Today And Start Building A Business Empire
Now you know how to start an LLC. All the points mentioned above are not state-specific, and different states might have different rules to comply with. So, before doing anything, make sure you visit your state secretary’s office and get all the necessary data on how to start an LLC.
