Starting a business means you must first decide on the legal status of your operation. One very common form is a limited liability company, or LLC. The members of the LLC share ownership and are responsible for filing the paperwork with the state agency that registers business entities. The process in most states is fairly streamlined and an attorney or other representative is not required.
Choosing a Name
The first step in forming an LLC is to decide on a business name. Your state's business agency will allow a search of currently registered names online. This process may also be available by phone or by a letter of inquiry to the appropriate department. Business names are proprietary; you may not duplicate another business name in your own state, even if that business has no trademark protection for it. In addition, state laws require that "LLC" follow the name wherever it appears on official forms and applications.
Articles of Organization
Next you file articles of organization, which give basic information about your limited liability company. The articles must include the names of all members, the business address and the date when the business was established. You also need to designate a registered agent who's authorized to accept legal papers. Some states, but not all, will require an operating agreement as well. This shows the share of the business owned by each member and the responsibilities of the members in operating the business. Many legal websites offer articles of organization and operating agreements as templates that you can complete online, print and then file by mail or electronically.
Mailed and Online Registration
Your business registration involves mailing completed documents to the appropriate state agency and paying a filing fee. Most states, including Minnesota, allow the online e-filing of routine business documents and registrations. You may need to set up an online account and use templates provided by the state. The fees levied by Minnesota's secretary of state as of the time of publication were $135 for a mailed-in registration and $155 for an online filing. Renewals, dissolutions and merger filings have different fee schedules; in some states, including Minnesota, the annual renewal is free of charge.
Tax Law and the Limited Liability Company
The Internal Revenue Service does not allow banks and insurance companies to operate as limited liability companies. It taxes the multimember LLC as a partnership, unless the members file Form 8832 and elect corporation status. An individual who operates an LLC as the sole member can elect to have the business taxed on his personal return. In effect, all the rules that relate to self-employment and business expenses of a sole proprietorship extend to the single-member LLC.
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