An LLC or a limited liability company is the most popular business option with many people diving into the opportunity to form an LLC. The ease of setting up an LLC makes it a flexible option for those who operate small businesses. There are only a few steps to forming an LLC, however, it is of utmost importance that the paperwork is filled out properly.
Before we go over some legalities of forming an LLC, it is to be noted that every state has different requirements that you need to check; however, the basic requirements remain the same for all.
Things To Understand Before You Form An LLC
Can Anyone Form An LLC?
There are not many restrictions on who can create an LLC in the United States. Corporations and individuals both have the option to explore an LLC business. For corporations, there needs to be a few companies partnered up to form an LLC but for individuals, it’s much easier. People can simply open an LLC in the States as long as they have the legal capacity, meaning that they are old enough to make a decision (legal adult). If you have a mental disability then you might face some obstacles in forming an LLC as it can cloud your ability to make decisions. Also, nowadays there are lots of LLC formation services that make the incorporation process even more simple and quick. For example, one of the most customer-friendly services is Northwest Registered Agent.
Operating Agreement: An Important Document To Put Together
Without an operating agreement, you cannot form an LLC. You must put together this document as it is a mandatory requirement for all states. The document requires the partners or individuals or corporations to establish the roles and responsibilities of those wanting to create an LLC.
Other than an operating agreement, each state might require additional documents so make sure to check that out on your state’s website for Small Business Administration. Once you’re done compiling all the documents, hand it over to the Small Business Administration in your state with the relevant fees which can vary from state to state. The fees start from $90 and can go up to $2,000 depending on the state you’re creating the LLC in.
Do You Require Any Licenses?
Once you’ve submitted the paperwork, the state will put all the documents in process. During this time, you must research the kind of permits or licenses you may require. Not all businesses are the same and might have different requirements. For example, a restaurant requires around 16 different licenses and permits to operate in the United States such as a sign permit, liquor license, business license, and more. If you’re confused about the type of permit or license you require, head down to your local courthouse for more information as the clerks there can guide you with the local state laws. Some states like Virginia and Indiana require individuals to post a notification in the local newspaper about their intentions to create an LLC. This however is a fading practice as many states have already abandoned this requirement.
The United States has federal and state laws and you must comply with both to avoid any troubles with the authorities. The federal would require you to have a basic business license while state requirements would vary. Check with the local state laws before starting your business.