How to Become a Limited Liability Corporation

Establishing your business as a legal entity separates your personal assets from your business assets and protects both. The most common business structure is the limited liability corporation. Filing the paperwork to incorporate as a limited liability corporation is a fairly easy process.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Limited Liability Corporation Articles Of Organization form

1. Determine if a limited liability corporation is the right structure for your business. The limited liability company structure is the choice for many business owners because it's easy to set up and protects personal assets. However, it is not the only business structure available. Consult your attorney and tax accountant to determine if the limited liability corporation is right for your business situation.

2. Contact your state's secretary of state to learn what is required in their articles of organization. Review the requirements and note what the fees and taxes are required in your state.

3. Select a name for your business. The name must meet state standards and must not be in use by any other LLC. Some states require specific formats for names. Make sure the name you choose follows that format, if necessary.

4. Complete the Limited Liability Company Articles Of Organization form. This form will ask for the name and business purpose of the LLC, and the names of each member of the corporation. It is a simple form, and some states allow you to file online. Submit the completed form with the required filing fee.

5. Write a formal operating agreement for your business. While this is not a formal filing requirement to become a Limited Liability Corporation, it is a good business practice. An operating agreement specifies details about who makes the decisions, how duties are divided, and how profits are distributed. Having a formal operating agreement helps settle disputes among the members and will be required when seeking financing for the business.

Tips & Warnings

• It is usually best to file in the state in which you plan to operate. Some people may advise you to incorporate in other states for tax savings, but this is usually not necessary or helpful. Check with your accountant to determine which state to incorporate you business. Most limited liability company filings are simple enough that you can do it by yourself, but if your venture is more complex, it is advisable to consult an attorney.

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