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How to Form an LLC

 Form an LLC – Wondering Hform an LLCow?

Form an LLC- wondering how?  It is not difficult to form an LLC. It is formed by preparing a short document called the LLC Articles of Organization that you file with the state.  Once it is filed, you have an LLC.  How long to form an LLC, to fill out the document?  Not long.  In many states, the Articles of Organization to form an LLC Business are available on the state’s website.  I know lots people who just fill in the blanks, file the state’s form LLC and start into business. You can easily form your own LLC, or have your attorney form an LLC for you by just filing the LLC Articles of Organization.  However if you want to get the asset and tax benefits that are available with an LLC, you need to have some additional documents and make the correct elections.  As an attorney, I need to warn you about problems you can avoid when you form an LLC.

Many people call me about their LLC protection, after they are in trouble.  I start asking them questions.  “When you put your rental unit into the LLC, did you get more membership interests back in return?”  They often give me a worried look, but seldom answer.  “Have you actually issued a membership interest certificate?”  They have no clue. “Is it a member managed or a manager managed LLC?”  Once again no clue.  “How many members are in the LLC?” Still they have no clue. Obviously, if nobody has a clue about what’s going on, the LLC is not going to have the legal protection they hoped for.  Will it protect the managers?  The members?  You?  Of course it won’t if all you did to form an LLC was fill out the Articles of Organization.

Why form an LLC?

Why form an LLC? Because you get a better asset protection than with most other business entities.  If you form a LLC correctly you will also get better accounting options plus the LLC will be a lot easier to maintain than a corporation. Limited Liability Companies (LLCs) are probably the most flexible business entities available today.

Many of my clients come in trying to get tax benefits after they form an LLC.  Then I ask another set of questions. “How is the LLC to be taxed?”  “Why did you set up your LLC and have it taxed as a C corporation?”  They have no clue.

If you plan to form an LLC, these are questions you must have answers for, whether you are just forming LLCs or already have one.  It is important to get all your ducks in a row.  After you file your LLC Articles of Organization, you need to make an Operating Agreement that defines your operation in such a way that it will provide you with double asset protection.  In my LLC Wizard, I walk you step by step through the Operating Agreement, so you can make it fit your business, tax, and asset protection needs.  To see the LLC Wizard click here. You will need to fund your LLC and issue membership interests.  Once again, the LLC Wizard is like magic as it walks you through this process.  You must also determine how to have your form LLC Corporation taxed.  This is a vital step.  It is important that you do not just accept the standard election and the LLC Wizard will help you make the proper election.  The LLC Wizard is your best asset on how to form an LLC company that will give you real asset protection and tax benefits.

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