How to Form a Limited Liability Company

Limited liability companies, or LLCs, can be a very effective form of incorporation, and they provide more protection to the owners than a sole proprietorship does. It may sound intimidating to form an LLC, but if you know what questions to answer and do your homework before you start filling out paperwork, it can be a simple process.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• A business

1. Determine who your partners are. Many LLCs are organized with two or three partners. You do not need partners to establish an LLC, though. If it is just you, that is fine.
2. Split up your shares. If you have partners, you need to decide what stake each owner will have in the business. Shares do not need to have any set value at the time of incorporation. They simply represent the portion of ownership that each partner controls.
3. Select a state to incorporate in. You do not need to form an LLC in the state you live in. You can pick any state to incorporate in. Some states have more favorable tax regulations than others. Do some research to determine what state is best for your business.
4. Choose the name of your business. Once you find a state to incorporate in, you need to choose a name and find out if that name is available. Check with the secretary of state's office in the state you want to form an LLC in for name availability.
5. Fill out the paperwork. Now that you have all the answers to these questions, you are ready to make things official. The secretary of state's office in the state you are incorporating in will have the paperwork you need to fill out. Some may even have online registration. Check with the secretary of state in every state you plan on doing business in to see if there is any paperwork you need to fill out.
6. Start raking in the dough!

Tips & Warnings

• Some of these issues can be complicated, and you may need to hire an attorney to help you answer questions about forming an LLC.