Filing to Start Your Limited Liability Company (LLC)

Regardless of what your industry or market is, or what state you're located in, filing to start your Limited Liability Company (LLC) assists in protecting your individual and family assets, also yielding tax-deductible benefits for you and your employees. Filing to create an LLC erects a legal wall between your individual owners' assets and the debts and other obligations taken on by the business. Too, LLCs don't have the same tax burden as corporations—after filing, the LLC's profits are "passed through" tax-free to the owners, who then only have to pay taxes calculated on their particular situations.

LLCs can conduct their operations with more flexibility than corporations can. Since they are also the owners, the members run the LLC, making decisions by consensus. In most states, you can even file for and run an LLC with only one member. After filing their initial documents, LLCs in some states can appoint certain members as "managers" to oversee routine operations. Members may have the same voting "weight" no matter what they have contributed to the LLC, or their voting power may be based on their investment relative to other members. How profits are distributed is also a matter that each LLC's members can decide for themselves.

Different states have different statutes that control filing to create an LLC. Filing to create an LLC may also be worthwhile if some owners live abroad, since LLC filing rules do not state that owners have to be US citizens. No matter what your location or status, IncFile.com <link> can minimize the time, effort, and guessing games engaged in filing to create an LLC.

States do require, though, that new LLCs file Articles of Organization (or that state's equivalent document), usually with the state tax/revenue office or the Secretary of State's office. Articles of organization usually are required to include the LLC's name, its business address, the names and addresses of its initial members, and the LLC's registered agent's name and address.

New LLCs should also draft an Operating Agreement, which contributes greatly to your LLC's effectiveness and credibility, even though it doesn't have to be filed with the state. An operating agreement sets out the LLC's requirements for membership, management, conducting business, and distributing profits. It lays out the members' roles, responsibilities, rights, and relationships; their respective ownership percentages and shares of profits and losses; how and when to admit new members; and what will happen if a member resigns or is expelled. This also helps prevent disagreements and misunderstandings about decision-making and financial dealings, and gives your LLC credibility as a separate entity, especially in legal proceedings.

The operating agreement helps safeguard your "limited liability" status—if you're a one-person show but don't have a formal operating agreement, the court may not pay any heed to limiting your personal liability and may view your operation as a sole proprietorship instead—making you vulnerable to greatly increased fiscal and operational risk.

Documenting your LLC's procedures—even though it doesn't have to be filed with the state—in an operating agreement also allows you to set the rules, instead of having to follow your state's default rules, which may or may not be appropriate for your business. Some states, for example, have a default rule that requires LLC members to divide profits and losses equally, regardless of the level of each member's investment in the business. These state default rules may be the controlling factor in how your business runs unless your operating agreement stipulates otherwise.

Since LLCs usually have relatively few members, most management decisions are made informally—but sometimes decisions are so significant that a formal vote is needed. While some LLCs give one vote per member regardless of shares—called per capita voting—it's more typical for each member to control votes proportionate to his or her shares in the business. The operating agreement should also specify whether a simple majority will settle voted questions, or whether consent must be given by all.

Sometimes, business owners put off the filing that will start up their LLC because they don't want to (or can't afford to) spend the time researching detailed laws and administrative requirements—but you don't have to do without the benefits of having an LLC because you don't have time to file the paperwork. IncFile.com takes the guesswork and high expenses out of forming your LLC.

No one wants to lose their house or other personal assets to pay business debts. Are you ready to start to file for your LLC today? Start now by choosing your state on the navigation bar at the top of the page to get more detailed information—or click on the "order" button to get a quote for the state in which you will be filing. Don't wait—get started today!