A step-by-step guide to starting an LLC


Setting up an LLC is one of the most important decisions you can make as a business owner. A limited liability company offers protection to your personal assets in case the business goes bankrupt or faces financial strains.

Most business owners opt to register their businesses as LLCs because of the liability protection it provides. To register your business as a limited liability company, you will have to file the requisite paperwork in the state where your business is based. Although every state has its own procedures and rules, there are certain steps you will always encounter regardless of your state.

Step 1: Decide the Name of your Company

The first step in setting up your LLC is to choose a name for your business. This includes searching for the existing names in the state you are planning to register your business to ensure that there’s no other company with a similar name. Your business won’t be registered if someone else is already using that name.

The best thing is to search for the name even before you start filing the LLC paperwork. Most states prohibit the use of certain words like “bank”. It would be good to check out some of the restricted words to make the registration process flawless. Selecting a unique name is the best way to avoid trademark infringement and any other confusion.

Step 2: Reserve the name

If the name you have chosen has not been taken, then you should reserve it, in case you are not planning to register your LLC right away. Incfile can help you register your LLC in Texas. Almost all states allow individuals to reserve a name and pay the reservation fee. The filing fees, duration of name reservation, and renewals policies differ from one state to another.

Step 3: Choose a Registered agent

All states require limited liability companies to have a registered agent. Also referred to as a statutory agent, a registered agent is responsible for receiving legal documents such as subpoenas and lawsuits on behalf of the LLC and handing them to the appropriate individuals in the company.

Anybody who is 18 years and above can act as a registered agent, including you or any employee of the company. There are also organizations that offer registered agent services at a fee.

Step 4: Prepare an LLC Operating Agreement

An LLC operating agreement is like a roadmap on how your limited liability company will run. It generally specifies things such as the ownership interest, voting rights of members, how profits and losses will be shared, how the business will be governed, how meetings will be held, the right of members in case one of them passes on or resigns from the business and how the company will be terminated in case it goes out of business.

Step 5: Prepare the Paperwork of the Organization

Every state has its own form as well as the process of setting up an LLC. But you will always be required to file articles of the LLC with the following components:

  • The name of your business
  • The primary address of where your business is located
  • Purposes of the business
  • How your company will be managed
  • Contact information of the registered agent
  • Duration of the LLC

The documents must usually be signed by the individual forming the LLC. Some states may require the registered agent to sign as well. In many states, the LLC formation documents will be filed by the secretary of state, while other states have separate departments handling the filing process.

Step 6: Get a Certificate from the State

After filing the LLC formation documents and having them approved, you will receive a certificate of incorporation plus other documents from the state. After receiving the certificate, you can now embark on other matters such as getting a tax ID number, business license and opening a bank account for your business.

Step 7: Register to Do Business in other States

In case your business operates in more than one state, you may be required to register it to run in other states. The registration process is almost similar to that of filling out LLC paperwork.

In a nutshell, there are many benefits of registering your business as a limited liability company. It will help protect your personal assets from the company’s debts.


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