The 5 Key Steps to Forming a Limited Liability Company

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The 5 Key Steps to Forming a Limited Liability
Company
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Step 1 - Choose Your Name

• A limited liability company, or LLC, offers an
  appealing way to start and operate your own
  business while keeping personal liability at bay.
  However, many people are unsure of how to form an
  LLC and whether its the right choice for them.
  To help you decide whether an LLC is the best
  legal structure for your business, this guide
  will cover the steps involved in forming one and
  what to do after youve filed your paperwork.

The first step in forming your LLC is choosing a
name for your company. This name should be
reflective of what your business does and be easy
for customers to remember. Youll also want to
make sure that the name you choose isnt already
being used by another business. One way to check
this is by visiting the Better Business Bureaus
website, which has a database of registered
businesses available for review. Step 2 File
Articles of Organization Once youve chosen your
name, its time to register with your state
government as an LLC.
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Step 2 - Appoint Directors

• There are different types of entities you can
  formS-corporation, C-corporation, partnership,
  or sole proprietorshipbut for this post, were
  focusing on the limited liability company.

To form a limited liability company, youll need
to appoint directors. This step is important
because the directors will be responsible for the
management of the company. Theyll also be in
charge of ensuring that the company complies with
all applicable laws and regulations. When
deciding who should serve as your director,
consider choosing people who have relevant
experience or expertise. You can always add new
members later on if necessary. Next, file your
articles of organization with the secretary of
states office. If you want to make changes at
any point after forming your LLC, such as adding
more members or changing the company name, youll
need to file an amendment certificate according
to a specific procedure. Finally, decide whether
or not you want to register for federal tax
purposes.
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Step 3 - Issue Shares

• Once you have registered your company with the
  state, the next step is to issue shares. This is
  done by creating a stock certificate, which will
  list the names of the shareholders and the number
  of shares they own. The shareholders will then
  sign the certificate, which will be kept on file
  with the company. Issuing shares is a key step in
  the formation of a limited liability company
  because it determines who owns what percentage of
  the company. If there are three owners, for
  example, each one would receive 33 ownership. If
  there are five owners, each one would receive
  20. The formation of a limited liability company
  formation can get more complicated if there are
  unequal percentages among the shareholders or if
  different classes of shares exist (e.g., Class A,
  Class B).
• Formation of limited liability company formation
  typically happens before any financial
  contributions to the company take place or any
  investments have been made. However, this can
  vary from situation to situation based on how
  much money has been raised from outside investors
  or the amount that an individual shareholder has
  contributed towards capitalization.

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Step 4 - Draft An LLC Operating Agreement

• An LLC Operating Agreement is a contract between
  the members of the LLC that outlines how the
  business will be run. This agreement should
  include
• (1) The names of the members and their roles in
  the LLC
• (2) How decisions will be made
• (3) How profits and losses will be distributed
• (4) What happens if a member leaves the LLC
• (5) Any other rules that the members agree upon.
• The articles of organization filed with the
  Secretary of State are not required to include an
  operating agreement, but you should always have
  one drafted for your company. The LLC Operating
  Agreement does not need to be filed with the
  Secretary of State and can be kept private among
  the members.

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Step 5 - Obtain An EIN Number And Federal Tax ID
Number

• A person who wants to see it must file a written
  request which must state the reason why they want
  to access it. Members cant share confidential
  information about the LLC without permission from
  all members unless its public information or
  required by law. Once these steps are completed,
  congratulations! Youre ready to register your
  new LLC!

You will need an EIN to open a business bank
account and apply for business licenses. You can
obtain an EIN by filing Form SS-4 with the IRS.
The form is available on the IRS website or by
calling the IRS. Once you have obtained your EIN,
you will need to obtain a federal tax ID number.
This can be done by filing Form W-9 with the IRS.
Again, this form is available on the IRS website
or by calling the IRS at [phone]. Remember
that all correspondence from banks, credit card
companies, and other businesses will use these
numbers so its important to keep them up to date
as your company grows.
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Contact Us

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  Christi, Texas 78401
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