Starting a business in any way, shape, or form tends to be accompanied by a fair bit of anxiety. However, the formation of an LLC is not a difficult prospect and even if the process still seems too daunting, there are formation services who can help.
A Limited Liability Company (LLC) is one of the most trusted and popular business structures in the U.S. especially because of the personal liability protection that it offers. It is the easiest way of protecting yourself against liability should the business suffer financially or get into legal trouble. Your car, house, and bank accounts will not be accessible in order to cover the cost of the businesses’ losses.
How do you form an LLC?
There are two ways you can go about creating your LLC. The first is done independently by you and it’s all online. The second is by hiring a Formation Service which does it all for you. The following are the six steps you have to take, should you decide to start your business by yourself:
1. Choose your state.
It’s a good idea to from your business in the state where you will be operating. However, should you plan on having a physical presence in other states then you’ll need to file for a foreign LLC in each individual state where business will be conducted.
2. Decide on a unique name.
Try to find a name that will set you apart, but keep in mind that it has to abide by state naming laws which are unique to each state. Should you have the desire to protect your name at a federal level, then it’s a good idea to check the name against the official trademark database, as upheld by the United States Patent and Trademark Office.
3. Choose a Registered Agent.
Choose a person or a business entity who has the power to accept legal documents on behalf of the business. This is compulsory in most states and the person or business entity has to be a resident of the state your business is operating in or a corporation who can legally operate in the state.
4. File the LLC with the State.
A formation document needs to be filed with the state in order for the LLC to be official. This document is known as the Articles of Organization, the Certificate of Formation, or the Certificate of Organization.
5. Establish an LLC Operating Agreement
This document structures the ownership and states the member roles of the new LLC. In most states it is not compulsory, but it is still good to have one.
6. Get an Employer Identification Number (EIN)
An EIN is comparable to a social security number for your business and is required should you wish to employ people or open a business bank account. This process is free through the Internal Revenue Service (IRS).
Who can help?
If this process seems just a bit too much to do alone, there are brilliant formation services who have been proven to help form a business that is successful. There are five who are especially noteworthy:
1. ZenBusiness ($39 plus state fees)
2. Rocket Lawyer ($349.99 plus state fees)
3. Incfile (For free, but not state fees non-inclusive)
4. Northwest Registered Agent ($49 plus state fees)
5. LegalZoom ($79 plus state fees)
They are all well-known for their excellence in different fields. All of these services also offer various levels which are characterised by specific features; however, this comes at an increase in price. Most of these formation services include registered agent services, a free operating agreement, and an assessment of the businesses’ financials. Once you start paying more, the service might offer an EIN and domain name registration.
SBIR loans stand for Small Business Innovation Research (or SBIR) program, which is an American government funding program, intended to help certain small businesses conduct research and development (R&D). Funding takes the form of contracts or grants.
For more information on the best formation services, TRUiC offers brilliant advice and an in-depth look at each of them. https://www.youtube.com/watch?v=JmQplnkDBTs&t=247s.