Start an LLC
Start an LLC (Limited Liability Company) is not hard. In fact, you can start an LLC without any legal beagles or internet one size fits all help. I’m going to assume you have already answered the question, “why start an LLC” and decided you need one.
The favorite question people have for me at events where I speak is, “How do you start an LLC?”
Start an LLC by Drafting Articles of Organization
The first thing you need to do to start a LLC is to draft your articles of organization. Pick the state you want to start a LLC company in, and go to that state’s website. It will be on the state’s website under the Secretary of State’s heading, business department, or business formation division of the state.
Once you’re there, get their blank form for setting up LLC articles of organization. In some states, you can fill out the form right on line. They will have a Q&A section on how to start a LLC business in their state. (Sometimes their Q&A creates more questions than it answers.)
Once you’ve filled out the state forms, you have to pay the “start a LLC” fee. The state will often take a credit card; many even take the credit card payment online. Can you see why you don’t need to pay the “expedited fees” on internet new start LLC setup sites?
By the way, don’t be sucked in by the advertisements that you have to form your LLC in Nevada, Delaware, Alaska or any other exotic place. When you start a LLC company, just do it in the state where you will be doing business or the LLC will own property.
There are no real advantages to Nevada. It’s just a big advertising campaign to get your business. The “corporate organizers” will just make a lot of money for doing nothing acting as your “registered agent.”
You’ve got to have someone (a warm body), in the state where you’re starting a LLC, to act as your registered agent. Picking your registered agent is another story on how to start an LLC company, but if you are living in the state or have an office in the state, you can be the registered agent.
When you’re setting up an LLC, don’t fill out any more information for the state than you have to. It’s public information. The less information you put out there, the safer you are. Some lawyers like to embellish to make you think they are smart. Just use the state forms to start LLC registration processes, and give the minimum information required.
Start an LLC with Operating Agreement
The operating agreement is really important. It provides you with your tax advantages, asset protection, disaster plan, and “operating” instructions. You get to write the operating agreement. It isn’t a one size fits all document you can grab off one of the “How to Start a LLC Company” websites.
As long as the terms of your operating agreement don’t violate the laws, you can basically write anything you want into the operating agreement. I am stunned at the number of clients who come to me and they have set up an LLC that is worthless. The first thing I want to see is their operating agreement.
Their LLC is worthless, because they got their paper (articles of organization) off some cheapo How-To-Start-a-LLC website, and they never knew about the operating agreement. Or, they didn’t get the operating agreement, because it was more money than the articles of organization.
I have actually seen cases where the client was starting a LLC with an attorney, and the attorney never got around to giving them an operating agreement. Basically, no operating agreement – no protection – no tax benefits – no company.
Getting your operating agreement isn’t a how-to-start-LLC nightmare. It’s a big opportunity! You get to tell your partners, creditors, lawyers, courts and everyone else how they have to deal with your LLC. When you understand that, your operating agreement becomes a living dynamic document. The last thing your want to do is ignore it, or even use trite boilerplate from some “How to Start Up an LLC” Lawyer-approved website.
Once you’ve got your articles of organization and operating agreement, you’ve got to make some important tax decisions. If your LLC is successful, the tax decisions you make setting up a LLC can mean tens of thousands of dollar more each year in your pocket.
The tax forms have to be filled out properly and filed timely. You’ve never seen an answer-three-questions and bingo-you-got-your-LLC website launch into the tax decisions. You’re setting up a LLC; don’t you want the best asset protection and the most tax benefits you can get?
There are actually many decisions you need to make when you’re setting up an LLC that we haven’t talked about here. There all important decisions without a hard fast solid answer. You’ve got to study up to get what you want, or you’ll get nothing in almost every case.Read more