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 March 17, 2020

How to Set up an LLC in 7 Steps

Young business owner standing in doorway of her shop

So you’re starting your own businesscongrats! Before you pop the champagne, it’s important to decide whether you’re going to be a sole proprietor, incorporate, or set up an LLC (“limited liability company”). An LLC is a good way for owners of a business to limit their legal exposure and liability for the company’s debts.

Legally speaking, LLCs are separate from the owners (or “members”), essentially giving the owners/members protection from personal responsibility. They’re easy to set up. All you need to do is do a bit of research, then file the necessary paperwork, which varies from state to state.

There are a few general steps that apply no matter where you’re starting your new company, so check out these seven steps.

1. Pick a business name

Of course, you want a great, memorable name for your business, because these days, marketing is everything. But the name you pick for your new company must comply with state law. For example, many states don’t allow two different businesses to have the same name, EG “Rick’s Car Repair, LLC” and “Rick’s Car Repair, Inc.” And many states don’t allow you to have certain words in the name, like “bank” or “insurance.” In many states, you can search existing business names online, so step one is doing that. It’s also a good idea to research if other companies in the same business have a similar name so that you can avoid potential trademark infringement claims.

2. Pick your registered agent

Most states require LLCs to have a registered agent (also known as a “statutory agent”). Basically, that’s the designated person who represents the company as someone who would receive lawsuits, subpoenas and other official documents on behalf of the LLC. After receiving them, the agent agrees to give them to whoever is in charge. The requirements are that the agent is at least 18 and available at an address within the state during business hours. In some situations, you can hire a company to act as your registered agent.

3. Prep an LLC operating agreement

This document is the summary that describes how your LLC will be operated. It points out things like ownership interests, voting rights of members, how profits and losses are allocated, when and how meetings will be held, what happens if the business goes bankrupt, and other details. You don’t need to file this, but it’s a very important way for owners to specify rights and responsibilities.

4. File LLC documentation with your state

Every state has a different form and filing procedure when you start a new LLC, but one thing that’s consistent is that the owners have to file “articles of organization” (also known as a “certificate of organization”) and pay a filing fee. It’s a good idea to have a lawyer help you with this procedure, so keep in mind that LegalShield provider lawyers are always available to help you.

The articles of organization typically include things like the:

  • Name of the LLC
  • Purpose of the LLC and a description of the business
  • LLC’s address
  • LLC’s duration
  • Registered agent information
  • Management structure type (single manager, multiple managers, all members’ managers)

5. Get a certificate from your state

Once the state in which you live approves your LLC documents, they’ll send you a certificate that confirms the legal existence of your LLC. And once you have that certificate, you’re off to the races. You can set up a business bank account and get business licenses.

6. Get an Employer Identification Number

In order for your LLC to officially do business, you need an Employer Identification Number (“EIR”) from the IRS. You also need to file with the state to pay sales and employer taxes.

7. Make sure your LLC remains active

Officially launching your new LLC is just the beginning. Once it’s off the ground, you need to keep your business in good standing with your particular state. For example, you might need to file an annual report and pay certain annual fees. In California, for example, every LLC must pay an annual tax of $800. This differs, depending on what jurisdiction you’re in, so go online and find your state’s business filing site to verify all the steps you need to take.

LegalShield Can Help

Get Launch by LegalShield, the perfect membership plan to help you get your new LLC up and running. Whether you have general questions about starting your new business, or specific business formulation questions, LegalShield is here to give you all of the business-related help you need. Reach out today!

LegalShield provides access to legal services offered by a network of provider law firms to LegalShield Members through member-based participation. Neither LegalShield nor its officers, employees or sales associates directly or indirectly provide legal services, representation or advice. See a plan contract at for specific state of residence for complete terms, coverage, amounts, and conditions. This is not intended to be legal or medical advice. Please contact a medical professional for medical advice or assistance and an attorney for legal advice or assistance.


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