As of 2024, there are 33 million small businesses in the US, and they make up 99.9% of all US firms. Needless to say, the entrepreneurial mindset is strong in the country, and it’s driving our strong economy.
Perhaps these numbers have inspired you to pursue your own dreams, and you want to become a small business owner too. In most cases, opening a limited liability company (LLC) is the best choice since it offers protections that other entity types don’t.
Want to learn more about LLCs? Then keep reading. We’ll give you a quick overview of what they are and how to start an LLC yourself.
What Is an LLC?
This is a business structure type you can choose when starting a company, and it’s a combination of both corporations and partnerships/sole proprietorships.
This entity type is heavily favored by entrepreneurs since it offers limited liability protection. Should the business incur debts or face lawsuits, the personal assets of the LLC owners won’t be at risk.
LLCs also offer flexibility in terms of management and taxation. Plus, there’s less paperwork to file in comparison to corporations and there are simpler compliance obligations.
How Much Does It Cost to Start an LLC?
The cost for limited liability company formation depends on which state you’re filing in. For example, if you’re filing in Massachusetts or Illinois, you can expect to pay around $500, while this fee is a small $50 in states such as Arizona, Colorado, and New Mexico.
Also, there are many other factors at play here, and the costs will vary depending on whether you seek a professional’s assistance. These factors include:
- Registered agent fees
- Operating agreement
- Business licenses and permits
- Publication fees (if required)
- Ongoing annual fees
- Expedited filing fees
If you’re not clear on the terms above, then not to worry. We’ll discuss them in the next sections as we go through the steps of starting an LLC.
Choose a Business Name
The first step to creating any sort of business is to choose a unique name. Not only will this be great for branding, but it’ll also ensure that no other businesses can come after you for legal issues.
To check name availability, you should check with your Secretary of State. They’ll have a complete database of company names, and you can usually browse it for free.
In addition, check the LLC naming rules, as they’re different for each state. Regardless of which state you’re registering your LLC in, you’ll have to include “LLC” in the name in some form, such as “Limited Liability Company” or “L.L.C.”
Select a Registered Agent
All LLCs must have a designated registered agent. This is an individual or company that’s authorized to receive legal documents on behalf of your LLC. They must have a physical address in the state of formation, and they must be available during normal business hours.
Practically anyone can be your LLC’s registered agent, including yourself. However, we strongly discourage you from doing so, as it comes with many issues that are easily avoidable.
Instead, you can use an affordable registered agent service, such as ours. It costs as low as $147 per year, and you’ll have complete peace of mind knowing that a professional’s handling your important documents.
File Your Articles of Organization
The articles of organization is the document you’ll have to file to create your LLC. In most cases, you’ll file it with the Secretary of State; otherwise, you’ll send it to the equivalent office.
In the form, you should include the following:
- The LLC’s name
- The LLC’s address
- The registered agent’s name
- The registered agent’s address
- Member and manager information (if required)
When sending in your articles of organization, this is when you’d pay the state filing fees.
We at Business Anywhere also have a business registration service, which is free to use! You’ll still have to take care of the state filing fee, but otherwise, you won’t have to pay another cent (unless you want to use our other services).
Create an Operating Agreement
Not every state requires you to create an operating agreement, but it’s worth taking the extra time and effort to write one out. This is an outline of how your LLC will be managed, so it’ll describe member roles, decision-making processes, and profit-sharing.
The operating agreement can help you and other LLC members keep operations on track. Plus, if there are any disputes, the judge will use this document to aid their decisions.
If you don’t want to create this file yourself, then we can help here too. For just $97, we can write up a solid operating agreement for your LLC.
Get Your Employer Identification Number (EIN)
EINs are required for any companies that hire employees, but even if you want to run a one-man show, it’s a good idea to get one. You’ll need it to open a business bank account, and it’s recommended that you have one to separate personal and business finances.
It’s free to obtain an EIN from the IRS, so there’s no harm in requesting one. It’ll be the number you use in place of your Social Security Number when reporting taxes for your LLC.
Fulfill State-Specific Requirements
Every state will have its own laws regarding permits and licenses. It’s also likely that there are industry-specific requirements, so make sure you do your due diligence to learn about them and fulfill them too.
In addition, be aware that some states require periodic filings to maintain your LLC in good standing. Don’t neglect these, as they can really hinder your operations if you fail to file.
Open a Business Bank Account
We mentioned earlier that it’s good to keep your personal and business finances separate, and you can do this by opening a business bank account. Having one will help you maintain liability protection.
Typically, you’ll need these things to open the account:
- EIN
- Articles of organization
- Operating agreement
Stay Compliant
Understand your LLC’s tax obligations on not only the local level, but the state and federal levels too. You should also keep track of deadlines for renewing licenses or submitting annual reports.
These tasks may be difficult to do on your own, so consider working with tax and legal professionals.
That’s How to Start an LLC
Now you’ve learned how to start an LLC, which isn’t difficult at all. While there are several steps, they’re very clear-cut, so you shouldn’t have any trouble.
Of course, you can lessen your stress by having Business Anywhere handle the registration side of things. We have years of experience doing this for other entrepreneurs, so you’re in good hands.
Sign up with Business Anywhere now to use our free business registration service. Don’t forget to check out our other services too.
