Questions About Starting a Limited Liability Company (LLC)
If you are ready to start a business, you may be considering starting a limited liability company (LLC). Here are some common questions you may be asking about how to form an LLC.
Do I need an attorney to help me start an LLC?
An attorney can certainly help if you are unsure about how to file your LLC application in your state, but in many states, you can file online or through a simple mail-in document. You can form a limited liability company without an attorney, by filing the Articles of Organization with your state, unless your LLC is very complex. (In some states, you file a Certificate of Organization instead.) You should have an attorney help you prepare the Operating Agreement of the LLC to be sure you have not forgotten anything.
Can I name my LLC anything I want? Do I have to use "LLC" in the name?
All states require that you include the designation "LLC" or some variation, like spelling out "Limited Liability Company" in your name to distinguish it as an LLC. Otherwise, you can name your LLC anything you want as long as another company is not using that name or a very similar name in your state. Selecting a business name is an important task, so take your time and do your research.
What's the difference between a "Limited Liability Company" and a "Limited Liability Corporation"?
There is a myth going around that the term LLC stands for "limited liability corporation." The "limited liability corporation" is actually incorrect; there's no such corporation type. A corporation is a separate business entity from an LLC.
After the limited liability company is formed, what are the recordkeeping requirements?
In the same manner, as a corporation, minutes need to be kept of meetings of the limited liability company. You may also have to file periodic reports with your state's secretary of state. (Look for the "business" or "corporate" division.)
What is the cost to form an LLC?
You will need to pay a fee for filing your Articles of Organization/Certificate of Organization. This fee varies by state, but it is usually between $50 and $200. If you have an attorney do this filing, it can cost you an additional $500 or more. If the attorney prepares the Operating Agreement, that will be another cost, probably $1000 or more.
I see that a "registered agent" is required to form the LLC. Can I serve as my own registered agent?
A registered agent is a person or business who represents the business for legal correspondence. You can act as your LLC's registered agent if your address is in the same state as the LLC is registered. A PO Box for a registered agent is not allowed in most states. If you are registering your LLC in another state, you must find someone in that state to serve as the registered agent. While you can serve as your own registered agent, there are several reasons why it's better to have a specific registered agent service.
Do I need to register the LLC name with my state?
When you form an LLC, you are not officially an LLC until you register your business with your state. To register, you must submit the Articles of Organization, and you are also registering the name. Before the state approves your LLC, it checks to be sure the name is not being used by another business in the state, so there's no need to register the business name with the state in this case.
In most states, the registration of the LLC also serves to register the name. Check with your state Secretary of State to be sure. If you are thinking about registering your LLC in a state, but you aren't quite ready, it's a good idea to register your LLC's name anyway, just to save the name from being taken by someone else.
Does an LLC need a partnership agreement?
A multiple-member LLC is taxed as a partnership, but an LLC should manage operations through an Operating Agreement, which functions like a partnership agreement but is just called by a different name.
Even a single member LLC needs an operating agreement, to describe the operations of the business, define the separation between the owner and the business, clarify succession, and avoid "default rules" of the state.