Limited Liability Company Formation

2007-03-08 10:33:40

( Business )



A limited liability company formation requires you to create a business name that is in accordance with the rules of your state. In general, the business name that you use must be unique. Your business name must end with the words Limited Liability Company, Limited Company in its full form. Abbreviated forms may also be used such as LLC, Ltd, L.L.C. or Ltd. Liability Co. the business name cannot contain the words, insurance, city, bank or corporation. You should check with your local LLC office as the list of prohibited names differs in each state. You can reserve your company name for a certain period by paying a fee if you do not have your articles of organization ready.

The next step in forming a limited liability company is to pay a filing fee and to submit articles of organization. This must be done at your local LLC filing office. An article of organization is another name for certification of formation or organization. It contains the company name, addresses, names of the company’s owners/members and the contact information of the registered agent. The articles must be signed by all owners, or by an authorized person.

A limited liability company formation requires you to create an LLC operating agreement. This document is kept in your office, and is not submitted to the LLC filing office. This document outlines the regulations on the ownership and operation of your business. It should include information on the rights and responsibilities of each owner, the percentage of ownership and voting powers. The document should also contain the rules on the management of the business, the division of profits and losses, voting rules and how meetings are to be held. Subsequently, even rules on how to sell and buy shares of other members in the event of sickness or becoming disabled should be outlined.

In some states a limited liability company formation requires you to make an announcement in the local paper of your intention to form an LLC.

Lastly, permits and licenses need to be obtained prior to the formal operations of your business. These would include a federal employer ID, a tax registration number and a selling permit.


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