By setting up an LLC (limited liability company), business owners aim to restrict their legal responsibility for company debts. This concept is more flexible and simpler than corporations, as it carries fewer reporting requirements.
An LLC functions independently from its members (also called owners), which removes the owners’ personal responsibility for business debts. The liability protection makes LLC perfect for small businesses.
Here’s a detailed guide for setting up your LLC with LegalZoom.
Create an LLC Name & Ensure It’s Available
The first step towards creating an LLC company is choosing a name for your business.
Your LLC’s business name must meet several requirements:
- It should contain an indicative label (“LLC” or “limited liability company”) that implies your business is an LLC.
- Specific restricted terms (like “bank” or “insurance”) can’t be a part of your business name. This means you should check the particular list of restricted words in your state upfront.
- Ensure your desired brand name is completely unique to avoid trademark infringement. For that purpose, you can browse the TESS (Trademark Electronic Search System), a public search interface containing registered trademarks and pending trademark applications in the U.S. Patent and Trademark Office.
Alternatively, you can use the free service provided by LegalZoom to ensure your business name is available and doesn’t overlap with any other. This way, LegalZoom does all the work – they inquire your state government about the matter and then (in around 15 minutes) a representative gives you a call to confirm the authenticity of your name.
Define the Purpose of Your LLC
The second step is answering several questions about the plans and goals of your business.
LegalZoom will ask you about the expected launch date, the industry your business belongs to, and whether this is your first LLC. Depending on your answers, LegalZoom will offer you more valuable information and services.
Decide Whether You’ll Hire Employees
Next, you should inform LegalZoom whether you intend to recruit employees in the first year of business.
This fact will not influence your LLC; however, it will help LegalZoom’s representatives to provide you with suitable assistance.
Appoint a Statutory Agent
A registered agent (or statutory agent) is someone responsible for receiving official documents (such as lawsuits or subpoenas) in the name of an LLC and delivering.
Choosing a state resident over the age of 18 as a registered agent for your LLC is mandatory in most states.
Choose Recommended LLC Documents
The Essential Documents section of the sign-up process consists of three elements:
- Operating Agreement
Extra cost: $99
Recommended to: Businesses that have multiple owners or aim to tailor the regulations in their LLC.
- Operating Agreement and EIN
Extra cost: $159
Recommended to: Small businesses with a goal to hire employees.
- Operating Agreement, EIN, and Licenses
Extra cost: $99.99
Recommended to: Small businesses in need of permits or licenses for functioning.
Obtain an Operating Agreement
An operating agreement is a crucial document that outlines the structure for internal business affairs, including members’ powers and tasks, percentage of members’ ownership, voting rights and duties, and provisions for the transfer of members’ interests.
Although it isn’t obligatory in many states, obtaining an operating agreement is highly advised.
Employer Identification Number
The Internal Revenue Service tracks your business through the Employer Identification Number. Without it, you wouldn’t be able to pay taxes.
If you prefer to skip obtaining an EIN through the IRS website, you may pay LegalZoom to provide you with it.
Business License
Various business permits and licenses are mandatory for running an LLC company depending on the state and local government’s decisions.
Unless you’re familiar with the multiple licenses or permits your company needs or the process of obtaining them, LegalZoom will get you covered.
Additional Business Services
Other benefits you can get from LegalZoom are included in the Smart Employer and Total Compliance services.
- The Smart Employer covers legal advice from tax professionals and unlimited legal forms.
- The Total Compliance prevents you from missing LLC renewal deadlines and therefore being required to pay a late fee to the local government.
LLC Package Options and Costs
LegalZoom offers three packages according to your business’s needs: Economy (priced at $149), Standard (priced at $329), and Express Gold (priced at $349).
Your choice depends on the functioning of your business. If you already have customers and require speedy document filing, it would be wise to go for the Express Gold or Standard package.
Provide Final Details
If you have completed all the previous steps, you should provide LegalZoom with the final details for your company and choose a payment method.
Here is the data you should provide for completing the LLC set-up process:
- Business address – LegalZoom needs to know the main location of your business to identify state-specific legal regulations.
- Your status as a licensed professional – Licensed professionals in a scientific field such as law, architecture, medicine, or accounting should form a Professional LLC.
- End of your company’s financial year – Usually, the end of your financial year is on December 31; however, you may set another date if there is a large increase in income at a particular period of the year.
- Dissolution date – You should disclose the date of closure for short-term businesses with a temporary purpose, such as a particular event.
- Names of owners – Name every owner of your business.
- Ownership interests – Ownership of your company can be divided into units or percentages, confirmed with owner consent for the transfer of ownership. You are required to provide a list of each owner’s part.
- Management structure – Disclose the type of management you plan for your business: member-management or manager-management (internal or lead by a third-party manager).
- EIN data – If you choose LegalZoom’s services for acquiring an EIN, you should provide information about the nature of your company.
- Contact information – One of your LLC’s owners or managers is supposed to leave their name, phone number, and Social Security number for the IRS.
Finally, submit your application so that LegalZoom prepares and sends your documentation to your Secretary of State. As soon as you get an email with LegalZoom’s notification for approval, your LLC is off to a good start.
Author
Raymond Hickman is a distinguished lawyer, writer, and legal commentator with extensive experience in various areas of law. He is widely recognized for his exceptional legal knowledge, insightful analysis, and engaging writing style, which have earned him a reputation as a leading voice in the legal profession.With his exceptional legal expertise, insightful analysis, and engaging writing style, Mr. Hickman has earned a reputation as a leading authority in the legal profession. His contributions to the field of law have been recognized by his peers, clients, and the wider legal community, making him a valuable resource for anyone seeking legal advice or insight.