LLC, or a limited liability company, is one of the most popular options for a business entity. The reason for this is because LLCs protect you from any personal liability as well as provide you with the tax advantages that come from creating a partnership.
If you’ve decided that you want to legally form your company and create an LLC, understanding how to create an LLC is a crucial process that can take some time.
Below, we outline the 5 steps you’ll need to take to create an LLC:
The first step that you’ll need to take is decide which state you’ll want to form your LLC in. Because you can form a company or LLC in any state (including states that you don’t conduct business activities in), it’s important to do your research and pick a state that makes the most sense for your business.
Oftentimes, people will choose the state they are currently residing in — however, forming an LLC in a state outside of your own (i.e Delaware, Nevada, Wyoming) can be a popular business practice because other states may be friendlier for businesses.
For example, forming an LLC Formation in Delaware can have very low filing fees and franchise taxes when compared to an LLC formation in California. In addition, Delaware’s tax structures may also decrease your tax liabilities as there is no taxation on out of state income.
See more on “Which state should you file your LLC in?”
In order to create a new LLC, you must choose a unique company name that is not currently an active LLC name with the state you’re choosing to form in. This is due to the fact that most states don’t allow 2 different companies to have the same name — for example, you wouldn't be able to have a “Sally’s Mailroom, LLC” and a “Sally’s Mailroom, L.L.C” in the state of California even if they are different companies ending with different business entity identifier formats (i.e LLC, L.L.C, Limited Liability Company, etc).
Note: Many states will also prevent you from choosing a company name that could be deceptively similar to another business entity type like a corporation or a partnership.
Because of this, it’s important to research beforehand what names are available in your state so you can have this information ready before you file your LLC formation documents. This will help you avoid any issues that may come up if you were to use a business name that already exists.
You can easily search for existing business names through the state’s online business search system.
See California’s Business Search
Note: Some states even allow you to reserve a name beforehand if you know what business name you’d like to use, but aren’t necessarily ready to legally form your company.
Having a registered agent for your formation state is a requirement that all LLCs have. A registered agent is the person that you designate to receive official papers for your business. These official papers can include court notices if your business is being sued, business registration renewal reminders, and tax notices.
This registered agent can be an individual or a business that has and occupies a physical street address in the state where the LLC is registering in. If you choose to form your LLC in a state outside of your own, it may make the most sense for you to choose a registered agent service that can provide you with registered agents in any of the 50 states.
Here are some popular registered agent services:
The next step after choosing your name is to gather all the required information that will be needed for an LLC Formation. For example, in order to file your articles of organization, you will likely need all of the following:
If you’re not sure about some information (i.e what your business address for LLC is), we’d recommend doing additional research to understand other services like how a virtual business address for LLCs might make the most sense for you — especially if you are a small company without a permanent or a public business address.
In addition, we recommend looking at your specific formation state’s formation process in order to get a thorough view of what information you may or may not need.
See Delaware’s LLC Formation Forms and and Certificates
See California’s LLC Formation Service
After you gather all your required information and have a registered agent to designate for your company, it’s finally time to file your LLC articles of organization.
For most states, you’ll be able to file your LLC formation documents online with the secretary of state, and you’ll be able to receive your LLC certificate of formation online as well.
If you’d like to make it easier and decrease the amount of confusing paperwork that you’d need to go through, many people will also consider using an LLC formation service. These services are great at making it easier to understand what information you need to provide and how you can properly set up your LLC for success.
Here are some of the best LLC formation services:
Note: Most states will charge a filing fee that varies from state to state, and using these formation services will usually require an additional fee to utilize their services.
Understanding how to create an LLC is critical when you decide to legally form your company. Between choosing a unique business name to gathering all the necessary information you’d like outlined in your LLC’s articles of organization, creating an LLC for the first time can be stressful.
At Stable, we provide virtual business addresses and mailboxes for LLCs, corporations, and more. Our permanent business addresses can be used for your LLC formation documents, banks, the IRS, etc, and we’ll also digitize all the business mail that you receive at your address so you can access it from anywhere in the world.
If you’re interested in learning more or have additional questions about how to create an LLC — feel free to reach out to us at hello@useStable.com.
You can also get started with Stable if you’d a virtual business address in less than 3 minutes.
Disclaimer: Stable is not a legal or accounting firm, therefore we cannot provide legal or tax advice. You should consult legal and tax professionals for advice on how to meet ongoing obligations that apply to you and your company.