If you’re looking to start your own business, creating an LLC can be a great way to get started. However, it can also be a confusing and complex process.
Fortunately, there are steps you can take before forming your LLC to make it easier. These steps include filing articles of organization, getting an EIN, and establishing a registered agent.
Articles of organization
Articles of organization are the documents needed to form a limited liability company (LLC). They provide basic information about your LLC, such as its name and address. They also indicate important details about its purpose and management.
The articles of organization are filed with the state agency responsible for business filings. They are a critical step in establishing your new business and can affect how it operates in the future.
States often have pre-made templates for these forms, which can speed up the process of filing your articles of organization.
Each state’s requirements vary, so it is essential to familiarize yourself with what is required in your particular jurisdiction.
Among other things, the articles of organization need to contain the business name, the name and address of your LLC’s registered agent, the names of any members or managers of your LLC, and the company’s purpose. Your state may also require a statement about limited liability, which is an important benefit of an LLC.
Registered Agent
Every limited liability company (LLC) and corporation formed under the laws of a state is required to appoint and maintain a registered agent. This is a legal requirement to ensure that service of process, official correspondence and other documents can be delivered to your business.
You can choose to appoint yourself, an employee or a lawyer as your registered agent. The important thing to remember is that a registered agent must have a physical address and not a post office box.
When choosing a registered agent, consider the type of services they provide and their cost. A good registered agent will provide your business with a physical address in New York, make sure your information stays off public record, be the point of contact for your business during business hours and forward any mail or service of process received on your behalf to you. Some even offer compliance reminders so you never miss an upcoming state filing or lawsuit notification.
EIN
The EIN, or Employer Identification Number, is the IRS’s way of tracking the business activities of companies. Like a Social Security Number, an EIN is unique to each business.
A business needs an EIN to open a bank account, have employees and file taxes. Having one is also helpful in creating a separation between your personal assets and those of your business.
You can apply for your EIN online on the IRS website, by mail, or by fax. The IRS can issue the ID to you immediately after validating your information.
Not all LLCs need an EIN right away, however. Owners may choose to run their business on a small scale while they get a handle on long-term goals.
Regardless of whether you need an EIN for your LLC, it’s important to obtain one quickly. Not only can it help your company’s tax filings and business bank account, but it can also protect you from identity theft and give your company a unique, consistent identity.
Operating Agreement
The operating agreement serves a variety of important business functions, including defining the owners’ roles and responsibilities, protecting their personal assets, and limiting the liability of the company. The operating agreement should also detail the procedures for adding or removing members, and how the LLC will wind down upon death, bankruptcy, divorce, or other events.
The process for distributing profits and losses to the members of an LLC is another crucial section that must be addressed. This will include whether net profits or losses will be distributed equally, based on ownership percentage, or some other way.
It will also address how the company will determine when it is time to make distributions and what prerequisite conditions must be met. This can help avoid disputes or disagreements that could cause a business to fail.
An LLC operating agreement is an essential business document that should be created by every business owner. It may not be required by state laws, but it is an invaluable tool that can minimize future disagreements and protect your limited liability.
