Business Tips

7 Things You Need to Know About Setting up Your Own LLC in America

A Limited Liability Company (LLC) is a business structure that is peculiar to the United States business environment. With an LLC, the owners of a business are protected from both ends – liability and sole proprietorship. By design, an LLC combines the limited liability of a corporation with the pass-through taxation of a sole proprietorship.

If you are looking to setting up LLC America, there are seven (7) important factors that must be considered. In this article, you will find out what these factors are and why they matter.

1.    Select a State and Understand the Applicable Rules and Regulations

The one thing you don’t want to do is to err on the wrong side of the law when starting your Limited Liability Company (LLC) in the United States. As such, your first step is to select a state where you would like to establish the business.

Note that the laws on LLCs differ by state. For example, LLCs formed in Delaware are required to pay $300, being an annual tax. This is to be paid before the business owners can file an annual report.

On the other hand, LLCs formed in New York are required to make certain publications, with the most popular being the Articles of Organization. This is to be published at least at an interval of 6 weeks in two national newspapers.

Therefore, understand the applicable rules and regulations on LLC formation in the U.S. and try to comply with the same.

2.    Determine an LLC Name and Get it Registered

The next step is to determine a name for your LLC. Coming up with a business or brand name might be quite difficult and it takes a lot of time. Here is an article that walks you through the process of picking the right business name for your LLC.

It is advised that you come up with as many names as possible because the chances are that someone might have already registered the one you have in mind.

Next, check the availability of the business name with the Secretary of State. After conducting the name search and your preferred business name is available, proceed to reserve it ahead of registration. You can also register it as a trademark as a way of making it peculiar only to your brand.

3.    Register an Agent for Your LLC

Your LLC can make do with an agent, especially when you want someone to be an intermediary between your brand and the government. This is what a registered agent does for your LLC. By appointing the agent, you are empowering him or her to among many other things:

  • Serve as a point of contact between the government/State and your LLC.
  • Receive or accept confidential paperwork/documents on behalf of your business.
  • See to the compliance of your LLC with the existing and newer rules and regulations of doing business in the State.

4.    File Your LLC’s Articles of Organization

The Certificate of Formation or Articles of Organization is an important document for any LLC looking to get registered in the United States. The content of the document outlines the different structures of the business, including the owners/members, the addresses of the members, the name of the LLC, and the company’s operating address.

The Articles of Organization also contain information about the name of the agent and the residential address.

Filing the Articles of Organization or Certificate of Organization helps the State where it is being registered to recognize the presence of such a business, its owners, and the registered agent for the same.

5.    Craft Your LLC’s Operating Agreement

Registering the company with the State is one of the most important steps to operating an LLC in the U.S. However, the major success of the company lies in its operations and the members or directors have a role to play.

Fixing the structure of the business, the revenue model, and the mode of business operations from day one can help prevent any hassles later on. This is what you get from drafting the Operating Agreement for the LLC.

This is a document that among many other things, outlines the mode of doing business and possibly, the expectations of each member of the team. The Operating Agreement may also cover the disbursement and use of finance.

Drafting one and making a hard copy for each of the members can go a long way to keep everyone in check, as it pertains to the structure of the new company.

6.    Get the Relevant Licenses

Your LLC also needs to apply for the relevant licenses and permits that allow it to do business in the U.S. You can consult the local licensing office for ideas on the type of permits to get for your new company.

Further Reading:

7.    Evaluate the Tax Options

An LLC is not subject to some taxation policies, and that is one of the benefits that come with it. For example, the pass-through taxation that comes with the sole proprietorship model only charges tax on the personal tax returns of the owners and not on the corporate level.

Of course, this has a lot to do with the business structure. So, make sure you evaluate the options ahead of time to be sure of the options you have.

The most popular business structure options for an LLC are:

  • Sole proprietorship
  • General partnership
  • S-corporation
  • C-corporation

Concluding Thoughts

Setting up an LLC in the United States opens your company to the international market and a tendency for higher profits, thanks to the lower tax charges. Get it right from the first day by implementing the steps in this article so your LLC can start on the right foot.

Chukwukadibia Abah
CHUKWUKADIBIA ABAH is a passionate freelance writer and contributor to the Entrepreneur Business Blog. You can follow him on: Facebook: https://web.facebook.com/ChukwukadibiaAbah1/ Twitter: https://twitter.com/Chukwukadibia01 LinkedIn: https://www.linkedin.com/in/chukwukadibiaabah/ Instagram: https://instagram.com/chukwukadibia_abah

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