If your business is now open or you are planning to open it soon, you have to form an LLC. Even if your businesses doors are virtual or you think your business is so simple in structure that a formal business designation isn’t necessary, experts will tell you that you’re incorrect.
Forming an LLC not only makes your business compliant with your state, it also separates your business finances from your personal finances. If your business is sued or files for bankruptcy, the LLC designation doesn’t allow your family’s assets to be seized providing you’re compliant with the laws regarding separation of assets.
Forming an LLC is easy and although each state has a slightly different procedure, most of the steps you’ll take are the same regardless of where you live. To form your LLC you will need at least one important document and depending on the complexity of the business, possibly two.
Articles of Organization
Regardless of the structure of your business, in order to form an LLC in your state, you’ll need to submit a copy of your articles of organization. This document contains the identifying information of the business including the business name and address, names of partners or members, and the contact information for the registered or statutory agent if you have designated an attorney or auditor to receive legal documents on your behalf.
Some states provide a form that allows you to construct your articles of organization using their guidelines but you may also submit a document made by an attorney or other professional that helped you create the formal structure of your business.
LLC Operating Agreement
Although most states don’t mandate that you submit this form, the operating agreement is the document that details how key business decisions will be made, the roles and responsibilities of the partners or other executives in the company, and how the company will be liquidated should you decide to cease operation. Even if your state doesn’t require it, attorneys recommend having on file an operating agreement signed by all officers.
Many business owners use a business registration service to assist them in forming an LLC. It’s inexpensive and saves a lot of time but even if you hire somebody to help you with this, you will still need to draft these two documents largely on your own. Many small business websites have templates of these documents that you can download for free.