By starting a business, you’re making a powerful statement to the world: you think you have ideas, products and services that can really make a difference. Good ideas, however, aren’t enough to get your business off the ground. It’s vital to also put a structure around your business so it can operate legally, and one of the best ways to do that is to create a Limited Liability Company, or LLC.
An LLC is one of the most popular types of business entities — it gives you the same protections as larger organizations, but without all of the paperwork, administration and costs. Creating an LLC isn’t complicated, but you do need to make sure you have all the right forms, agreements and other documentation in place.
Today, I’ll guide you through all the forms and deadlines you need to be aware of when you want to start your LLC. Let’s get into it…
A Quick Note on LLCs
LLCs are formed at a state level by filing with the secretary of state in the state where your business will be operating. Because of this, rules and regulations on forming and running LLCs do vary slightly from state to state. You should always check with the website of your secretary of state to understand your state’s specific requirements.
Articles of Organization
What They Are: Also known as a “Certificate of Formation,” Articles of Organization are the paperwork you submit to your secretary of state, asking them to set up an LLC business at your request. They are the single most important document when it comes to creating a business.
Why They Are Important: These documents are the foundation of your business. They contain the names and addresses of the people forming the LLC, what the LLC will be called, and several other pieces of important information. Without filing Articles of Organization, your LLC cannot exist.
How to File Them: There are a couple of ways to file your Articles of Organization.
- Download them from the Secretary of State website, fill them out, and email, fax, or mail them back
- Use a online business formation company who can gather all the important information and file the articles on your behalf
Deadlines and Timelines: Once you have filed your Articles of Organization, you will normally need to allow four to six weeks for your company formation. Expedited services are available in most states for an additional fee.
Fees: There is a fee associated with filing your Articles of Organization and starting an LLC. This fee varies from state to state; it can be between $50 and $500, with most falling in the $100-$200 range.
Name Reservation Form
What It Is: A Name Reservation Form is used to reserve a name for your LLC if you don’t want to form it yet.
Why It Is Important: You would use this form if you want to reserve a name for your LLC but for some reason don’t want to create the entity right now.
How to File it: You can download a name reservation form from your secretary of state website, fill it in, and send it back.
Deadlines and Timelines: You can fill in and complete one of these before starting your LLC. There is normally a maximum amount of time you can reserve a name for, which varies by state.
Fees: There is normally a low fee for filing a name reservation form.
Operating Agreement
What It Is: An Operating Agreement defines certain things about how your business will be run, including:
- The managers, members, and owners of the business
- How decisions will be made
- Ownership, compensation, and profit sharing
- Roles and responsibilities
Why It Is Important: An Operating Agreement removes confusion and provides clear accountability for all participants in an LLC. This is good practice as it means any issues or problems between managers and members can be resolved clearly and quickly through the principles laid out in the operating agreement.
How to File It: Most states do not require you to have an Operating Agreement, but it is still good practice anyway. Those who do require you to have an LLC will typically ask you to file it when you file your Articles of Organization.
Deadlines and Timelines: You should create your Operating Agreement before or when you decide to form an LLC.
Fees: There is not normally a fee for filing an Operating Agreement, and most states do not require you to file one.
Employer Identification Number
What It Is: An Employer Identification Number, or EIN, is used to identify a business as taxable; it is like having a social security number for a business.
Why It Is Important: You will normally need an EIN to hire employees, open a business bank account and complete federal and state tax filings.
How to Get an EIN: You can get an EIN from the Internal Revenue Service, or many online formation companies will obtain an EIN for you with an additional add-on fee.
Deadlines and Timelines: You should get an EIN immediately after creating your LLC.
Fees: There is no fee to get an EIN (unless purchasing an add-on as previously mentioned).
Business Permits and Licenses
What They Are: Business permits and licenses are the various documents you will need to have in place to run your business. These vary depending on several areas including:
- The industry in which you are operating
- How you employ people
- The city, region, and state where you are operating
- Sector-specific regulations
Why They Are Important: In most cases, you will need specific licenses and permits to operate legally. Without them you could be in breach of important regulations, which can mean legal or other action could be taken against your business. If you want to operate safely and lawfully, you will need to get all the required permits and licenses in place.
How to File Them: You will need to request permits and licenses in several different ways.
- Check with your city or municipal authority to see what local permits and licenses you need
- You may need additional federal licenses and permits based on your industry and various other factors
- You can find a complete list of required permits and licenses on the Small Business Administration website or you can look into getting an online formation company to help you with researching business licenses you need
Deadlines and Timelines: You should have licenses in place before you start to conduct business. Some licenses and permits will need to be renewed on a regular basis, typically annually or bi-annually.
Fees: There is often a fee associated with getting a business license or permit; these fees do vary.
Annual Company Reports
What They Are: Annual reports are regular filings you make with the secretary of state to keep them informed about your business. An LLC annual report typically contains one or more of the following, depending on state regulations:
- Company name
- Company physical address
- Details of products and services provided
- Name and home address of owners, members, and managers
- Shareholder details
Why They Are Important: Most states require you to file a report on an annual or bi-annual basis. If you do not file one, your business could be dissolved.
How to File Them: You can normally file your company’s annual report online through your state’s secretary of state website.
Deadlines and Timelines: Almost all annual reports have to be filed by a particular date. Your secretary of state will contact you and request you file your annual report.
Fees: There is sometimes a fee associated with filing an annual report, which could be anything between $10 and $800 depending on your state.
Tax Returns
What They Are: Tax returns are documents you file with state and federal authorities to show them how much you owe in taxes on your income. The main types of return you need to file are:
- A personal tax return: LLC income is treated as “pass through” income, meaning it is shown on your personal tax return
- A state tax return: if your state charges state tax, you will need to complete a return
- A sales tax return: if your business sells products and services, you may need to pay sales tax
- Other taxes: in some circumstances, you may need to pay other taxes
Why They Are Important: You must file your tax returns to meet your legal requirements to pay tax. Failure to file a tax return and pay tax can have significant legal consequences for you and your business.
How to File Them: You will normally work with an accountant to prepare and file your tax returns, but it’s also possible to do this yourself.
Deadlines and Timelines: All tax returns will have specific deadlines by which they need to be filed. Additionally, you may also need to prepay quarterly taxes to avoid an end of year penalty.
Fees: Your accountant will normally charge a fee to file your return, and of course you will need to pay the taxes owed.
Other Areas You Will Need to Look Into
There are various other things you will want to get in place for your LLC that depend on the details of your specific business. These include:
- Insurance, including professional indemnity and personal liability
- A business bank account, since an LLC requires you to track your personal and business assets separately
- Compliance with employee hiring laws and paying payroll tax
- A registered agent service to accept legal filings on your company’s behalf (required for LLCs)
Creating an LLC doesn’t have to be complicated if you have the right resources. Following all these steps will help you get a strong start on forming the legal structure to bring your business ideas to life.
Author’s Bio
Dustin Ray leads business development and growth initiatives at Incfile, a national document filing service company specializing in the formation of business entities. Founded in 2004, Incfile had assisted in the formation of more than 100,000 Corporations and LLCs. For only $49 + state fees, Incfile can help you easily and quickly form your LLC and start your business today.
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