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How to Start an LLC - Smart LLC Guide

How to Start an LLC (2024) | The Ultimate Guide

Do you want to know how to start an LLC and its essential steps? Before starting an LLC, it’s essential to know the steps clearly. It will help to plan and form your LLC with perfection.

An LLC protects its owners from personal responsibility for the company’s debts and legal issues. It offers advantages that match with no other type of business entity. 

We guide you on how to create an LLC to help ensure the success of your business.

Easy Steps on How to Start an LLC

If you are ready to start an LLC and learn the steps, you are in the right place. Setting up an LLC is vital in getting your business in progress. An LLC starting steps through your own business is an excellent adventure with opportunities and challenges. An LLC offers significant advantages, like liability protection. 

In this guide, we’ll walk you through the process of starting an LLC in seven easy-to-follow steps. Here are the essential key steps to starting an LLC:

1. Choose a Name and Register It. 

Firstly, you can use a “Doing Business As” (DBA) name for your LLC. You can pick a business name that suits your marketing and trademark. When starting an LLC, there are also some essential steps, such as:

Uniqueness

You ensure others do not use the name you choose for your business in your state. Confirm name availability on your state agency’s business filing website.

LLC mark

According to state rules, your business name should clearly show that it’s an LLC. It involves adding titles like “limited liability Company,” “L.L.C.,” or “LLC.” at the bottom of your business name.

Name reservation

In some states, you can reserve a name if you find one available but are not ready to complete the LLC formation paperwork. This process usually involves submitting a name reservation form and the fee.

Trademark check

your chosen name does not violate someone else’s trademark. It can save you the trouble of renaming your business later on.

2. Designate a Registered Agent

Each state has its registered agent, but they should be:

  • A person of 18 or older with a physical sound within the state 
  • A company certified to provide registered agent services in that state. 
  • You can either serve as your registered agent, appoint an employee or someone else, or use a registered agent for service.

3. Create an Operating Agreement

An LLC operating agreement is a helpful tool for your business. It includes member roles, decision-making processes, and more. There are six major categories of an operating agreement:

  • Organization
  • Management and Voting
  • Financial Investments
  • Profit Sharing
  • Alterations in Membership
  • Dissolution

4. File an LLC Article of Organization

To create an LLC, you must include articles of organization with your state. These articles typically include:

  • The LLC’s name.
  • The main business address of the LLC.
  • The LLC’s duration (if limited) and its purpose.
  • Whether its members or a designated manager manages the LLC.
  • The name of the corporate agent and their office address.
  • The signature of one or more LLC organizers.

Processing times align with some states offering quick processing for an additional fee. Then, you can receive a certificate from the state by verifying the legal existence of your LLC.

5. Get an EIN and Bank Account

An Employer Identification Number (EIN) is a social security number for your LLC. It is crucial for federal tax. Getting an EIN is free and easy on the IRS website. Here are some reasons you need an EIN:

  • If your LLC has employees or multiple members, it is necessary.
  • Single-member L.L.C.s without employees can use the owner’s Social Security number. However, it is often better to get an EIN, especially if you plan to open a business bank account.
  •  An EIN also helps protect your personal Social Security number. 

6. File Annual Reports and Pay Taxes

Many states are strict in stating that LLCs file annual reports must be accompanied by a filing fee. However, costs can vary from state to state

Taxes depending on your business activities, such as

  • selling goods  
  • collecting sales tax or
  • having employees 

You may need to register with the following state taxing authority. Check your state’s guide on LLC taxes and annual filings to learn about LLC tax registration rules.

7. Get Necessary Permits and Licenses

To run your business legally, you must need various licenses or permits. It varies depending on your business type and location. Some professions mandate that you apply for and keep a license. 

Contact the relevant state agencies to confirm that you have the proper registrations, licenses, and permits to conduct business in your state. It includes a seller’s permit, general business license, industry-specific licenses, enrollment in other states, and DBAs (Doing Business As). You may need to register a DBA if you use a business name other than your legal name.

Benefits of Starting an LLC: Transform Your Business

Maximize your opportunities with LLCs (Limited Liability Companies). Explore the advantages and choose the right option for your business.

Liability protection

It helps to protect your assets from the business’s debts. It also saves you from legal obligations.

Low maintenance

 LLCs require less paperwork and administrative work than corporations.

Tax benefits

LLCs offer tax benefits by avoiding double taxation. LLC members report their share of profits on their tax returns, which reduces the tax burden. The business itself does not pay taxes on its income.

Flexible profit sharing

The most crucial issue within the benefits of starting an LLC LLC owners can decide on profit distribution among members with flexibility. In contrast, corporations usually have stricter rules for distributing profits to shareholders.

Budgeting Your Business Dream: LLC Startup Costs

Are you hesitant about starting an LLC? Then, you must know how much it costs to start an LLC. The initial cost to form an LLC includes the state’s filing fee, varying from $50 to $500. There are other typical costs associated with setting up a new LLC, such as

  • Hiring a registered agent costs between $100 and $200 annually.
  • Reserving your LLC’s name before officially filing it.
  • Seeking expert help, if needed, may come with its startup fees.
  • Budgeting for licenses and permits.

Choose the Best State to Start an LLC

It is essential to choose the best state for your business. Wyoming, Delaware, and Nevada have reputations for fostering business-friendly environments. 

But remember, the benefits of these states might not help you if you don’t plan to run your LLC there. Picking the best state on how to start an LLC is a big decision, so think carefully. Now, let’s look at these two states: 

Wyoming

  • Recognized as the birthplace of the LLC.
  • Offers tax benefits with no income tax, franchise tax, and a lesser annual reporting fee of $50.
  • Provides security by not requiring the public record to include LLC owner names.
  • State sales tax is less than the national average at 4%.
  •  

Nevada

  • Familiar as one of the best states to framework an LLC.
  • Tax advantages with exemptions from state-level taxes
  • It offers security by not requiring LLC owner names in public records.

Getting help from a professional LLC service can save you time and money when creating an LLC, as they know the specific rules for your state. It reduces the chances of your paperwork being rejected because of errors. So, it’s a wise choice to use their expertise. 

Best LLC Services in 2023

  1. LegalZoom: Best for various services, from forming an LLC to tax advisory.
  2. ZenBusiness: Best for new businesses looking for comprehensive support.
  3. Incfile: Best for basic legal needs and affordability.
  4. Rocket Lawyer: Best for user-friendly and accessible services.
  5. Active Filings: Best for international entrepreneurs seeking tailored solutions.
  6. Swyft Filings: Best value for a basic LLC formation plan.
  7. Northwest Registered Agent: Best for affordable and reliable business services.
  8. BetterLegal: Best for customizable a la carte options.
  9. File now: Best for expedited processing of business filings.

Frequently Asked Questions

An LLC protects your business by providing limited liability, which protects your assets from the company’s debts and legal liabilities. It offers flexibility in management and taxation, making it an appealing choice for many small business owners.

The time to form an LLC varies by state. However, it typically involves paperwork processing, which can take several weeks. Once created, you can start your business activities.

Choosing the best state service for an LLC ensures you receive expert guidance, minimize errors, and navigate the formation process efficiently. It protects your business’s interests.

The cost of starting an LLC varies by state, with filing fees typically ranging from $50 to $500.

An LLC, or Limited Liability Company, offers personal liability protection for business owners, separating their assets from business debts and legal issues. It will be best if you choose it because of its popularity for small businesses because of its flexibility and protection.

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