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The Limited Liability Company (LLC) is a business structure that affords the limited liability protection of a corporation and the management flexibility of a sole proprietorship or a partnership. In case of a lawsuit or unpaid debt, only the business assets are at risk.

In contrast with a business set up as a corporation, a LLC does not need to hold regular management meetings. You are not required to keep records, but it is always a good idea to document important business decisions.

Another advantage of a LLC is taxation. Similar to sole proprietorship and partnerships, a LLC has pass-through taxation, so the members declare the business earnings on their personal income taxes. Nevertheless, LLC owners can elect to have their business taxed like a corporation. This will reduce the taxes for the owners who plan to retain most of the earnings in the corporation. You should speak with your accountant to see which elective taxation is suitable for your business.

How to form an LLC:

There are four ways you can form your LLC.

• Using an “incorporating company” will cost $50 to $200 extra, but these companies will register your business and, depending on the package you buy, even get your Tax ID Number.
• Your accountant might know the registration process and can help you for a fee.
• Using a lawyer is the most expensive, but most professional, solution. Depending on the lawyer, she might be able to help you to obtain the proper licenses for your industry.
• Do it yourself by getting the forms from your state’s website, or local offices

Though filing the LLC documents is not very complicated, you might want to have a lawyer and accountant or an incorporating company do this for you to ensure you do not miss a step.

Naming Your LLC

The following are some requirements for your LLC’s name:

• The name cannot include words such as “bank,” “insurance,” or “corporation.”
• You must choose a name that is different from another LLC registered in your State
• The name must end with “Limited Liability Company,” “Limited Company,” or an abbreviation such as LTD, Liability Co., L.L.C., or LLC.

Filing the Articles of Organization

The articles of incorporation are simple documents that you can get from your state’s filings office. In theses documents you provide the LLC address, name of the owners, and list the address of a person called the registered agent. The Registered Agent is the person who receives all the legal paperwork for your LLC.

Publishing

Some states require that you publish a notice in a local paper to set up your business as a LLC. In some cases once you register your LLC you should call your local county clerks office to obtain a list of qualified publications where you can publish. Your local county clerk’s office would be the county of your business address

Step 3: Get a Tax ID (Employer Identification Number)

Obtaining the Employer Identification Number (EIN) is a straightforward process. You must fill out a SS4 Form and file it with your local IRS service center.

You can obtain EIN number by filling and mailing out the SS4 form, applying through the web, using the IRS Tele-TIN service or the IRS FAX-TIN service.

Filling out the SS4 form:

You can download the form from the IRS website or apply online at www.irs.gov

You can order the form by phone:
1-800-829-3676 (Voice) 1-800-829-4059 (TTY)

This is a compilation of information and is not a guide. Check with your accountant or legal professional for information that pertains to you