So you’ve decided to start your own business, and you need to get an LLC? Are you unsure of how to get or set up an LLC? The first step in forming your company is finding the proper legal structure for it.
The law allows you to conduct business under different types of legal structures. One of the most common legal business structures is an LLC.
Some states can approve your LLC application within a few days, while others can take months to complete. The standard wait time is about three to four weeks. You do have option to expedite your formation by paying extra. See details regarding LLC formation and expediting options in our article below.
The process of forming your own LLC is standard across the United States, but some parts of the process vary depending on the state you plan on starting your business in. This brief article will go over the steps you need to take to form your LLC successfully and who you can reach out to for any questions or concerns.
How to Get an LLC
The first step to forming your LLC is to choose a name for your business. Because your business is an independent legal entity, it must hold a unique name.
When choosing your name, you will need to search within your state’s database to confirm that another entity does not already occupy the name of your LLC. You can look on your state’s Secretary of State website.
The name of your business should not duplicate another LLC’s name, and it needs to have LLC or Limited Liability Company in the name.
For example, let’s say you plan on opening a food delivery service and want to name it “Mike’s Mighty Meals,” you will need to have LLC at the end of the name. It should read “Mike’s Might Meals LLC.” Make sure your name does not contain words like corporation, secret service, or bank, as those are restricted words.
Draw Your Articles of Organization
Once you have your name picked out and you are sure no one else has that name, you will need to draw your articles of organization. This document acts as a formal application to establish your LLC legally in your home state.
It also sets forth the necessary details about your new business. Thanks to today’s technology, you won’t have to draw these documents from scratch. Instead, a quick online search on your secretary of state’s website will show you pre-filled forms. You will just need to input your information.
Information needed for your articles of organization:
- Your company’s name
- The physical location of where you will conduct business
- Names of your members
- Personal information for your members
- Type of business
- Name of the registered agent
When you complete the document, you will need to send this over to your secretary of state to review. If they accept your application, your LLC is now a legally registered business entity in your state.
Pick a Registered Agent
A registered agent is an entity that can act as a representative of your business. They must be registered in your state where you formed the company, and they must represent you in legal and governance aspects. If you plan to do business in different states, make sure that you find a registered agent in all of these states.
When you choose your registered agent, ensure that they will uphold your privacy. It is possible for you to be your company’s registered agent, but it is best to reach out to a third-party entity to take care of this task on your behalf.
Your appointed registered agent will receive all of your tax and legal documents, and they will make sure that your business does not overlook any valuable information such as government documents and legal suits.
Get Your EIN
An employer identification number, also known as an EIN, is like a social security number for your business. This IRS uses this number to identify and tax your business.
You can get an EIN for free if you apply with the IRS. If you plan to hire employees, make business transactions, file your taxes, or open a bank account, you will need this number.
Cost to Get an LLC
The cost of forming your organization articles with your secretary of state will depend on the state you file them in. For example, it is $300 to file in Texas, whereas it is only $70 to file in California.
Filing out your legal documents should not cost you anything. There are some websites that offer to file these documents on your behalf, but you can do them on your own.
Factors That Affect the Time It Takes to Set Up an LLC
The most significant factor affecting the time it takes to form your LLC is the standard processing time in the state you plan to form your business. Some states can approve your LLC application within a few days, while others can take months to complete. The standard wait time is about three to four weeks.
With the current pandemic going on, you may have to wait longer to get your LLC documents approved. You can always reach out to your secretary of state office to ask about how long it should take to approve your documents. They should be able to provide you with a more realistic time frame.
Accuracy of Your Information
In addition to the state’s standard processing time, you will also need to remember that if your documents are inaccurate, it can delay your acceptance time. For example, if you forget to fill something out or if you fill it out incorrectly, that can further delay your application.
Volume of Application
If you apply during a time where other people are applying for their LLCs, that could also delay your application. Many people apply to form their LLC daily, but there could be times where there is a large influx of applicants that you may not be aware of.
Of course, if you’ve submitted your documents and you have not heard back after a month, you may want to reach out to your secretary of state to see if they have a large volume of applications.
Options to Expedite Your LLC Processing
If you need your application to be processed within a shorter time, you have the option to do so. Depending on the state you wish to file your LLC in, you may have the opportunity to expedite your LLC application.
Keep in mind that not all states offer this option, and there are different rules and regulations around expediting your paperwork.
Expediting your process may cut your application period by about ten days, again depending on your state. The secretary of state will review your application ahead of other applicants and will respond to you as soon as they can.
Keep in mind that if you do go through with this option, there is no guarantee of approval for rush processing. You will still have to file all of the proper documentation accurately, or else you may have your application denied. If you do have this option available to you, there is an additional fee you will need to pay.
Best Practices for a Faster Approval
Regardless of the state you wish to file your LLC in and the available options for an expedited process, there are some ways to speed up the time it takes to get your LLC. For example, you will want to make sure that you double-check the information required by your Secretary of State to ensure that you are sending in the correct documents.
This is one of the most common mistakes people make when forming their LLC. Make sure that you take that extra step to ensure that you meet all the requirements and have all the documents you need to increase your chances of a quick and easy approval process.
LLC Filing Service
As mentioned earlier, there are LLC filing services you can use for an additional fee. Again, you don’t have to go through with these services, and you can fill out the documents on your own.
If you want to make sure that your documents are accurate or if you don’t have the time to file your documents, you can have someone else do it for you. We recommend working with company like Rocket Lawyer to for filing service. Click here to try them for free
The LLC filing service will ensure that all of your documents are accurate, complete, and meet all the requirements set by the state you live in. They also can submit these documents on your behalf, which can also increase your chances of having them approved within a shorter amount of time.
Advantages of an LLC
One of the most significant advantages of forming an LLC is the fact that it limits your personal liability. An LLC is viewed as a legal entity that is separate from the listed owners or members of the business.
This means that any of your own personal assets that are not tied or listed under the LLC are not subject to any LLC debts or legal liabilities. There are some instances where you would be legally liable, but that is usually only if you personally guarantee the business debt.
Form Your LLC Today
Forming your LLC is a relatively straightforward process. Once you have your business idea, confirm your business name is available, and have your forms filled out, you can submit your information with your form of payment to get an LLC.
Of course, each state is different with processing time and the cost to form your business, but overall, the process is pretty standard. If you like to learn more about LLCs see our recommended articles below
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LLC for Rental Property in California
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