What is an LLC?

A limited liability company or LLC, is a separate and distinct legal entity you create to own and run a business. This means that an LLC can get a tax identification number, open a bank account and do business, all under its own name.

How Do I Start an LLC?

Starting an LLC is straightforward. Generally, it simply requires filing an Articles of Organization with the state office charged with handling such matters.

In What State Should I File my LLC?

Most people choose to form LLCs in their home state. Typically, saves you money because the LLC will not need to register as a foreign LLC if it does business in its home state.

Should I Check to See if the Name of my LLC is available Prior to Filing For It?

Yes. The very first thing to do prior to starting an LLC is to thoroughly research the name you wish to use in order to be sure it is available. This assist you to avoid potential claims of trademark infringement if you adopt a name too similar to another’s as well as having to rename your LLC after spending thousands of dollars promoting it.

Does the Name of an LLC need to Contain any Specific Language?

This varies on a state-by-state basis. Generally, the LLC’s name must contain one of the following at the end of the name: LLC; L.L.C.; or Limited Liability Company. In some states, the word, “limited” can be abbreviated “Ltd.” and the word “company” can be abbreviated to “Co.”

Of note, the name cannot include any words implying that it is part of the state or federal government, or that it is a part of any business in which it is not authorized to be. Additionally, a professional LLC must use certain words, such as professional limited liability company or the abbreviation P.L.L.C. as part of its company name.

How do I form an LLC?

In most states an LLC is created by the filing Articles of Organization with the secretary of state and paying the required state filing fee. Once these articles are filed and approved, the LLC becomes a legal business entity.

What Information is Needed for the Articles of Organization?

The Articles of Organization outline basic details about your company. States have different requirements for what information is required to form an LLC, but generally you will need the following: • The exact name of the LLC you are starting; • A description of company’s business; • The mailing address where the principle place of business will be located (Of note, this can be a P.O. box in many states); • The name and address of the Registered Agent; and • Basic information about the LLC’s Members, Managers, and Officers.

What is a Member?

A member is a person who owns an interest in an LLC. Unless the articles of organization provide otherwise, the members also manage the LLC.

What is a Managing Member?

A managing member is a member of the LLC who runs the operations. If all of the members do not want to manage the LLC, then one or more of them can be designated a managing member.

What is a Manager?

A manager is a person who is not a member of the LLC but runs the business. This is done when the members of the LLC want a nonmember to run the operations.

What is an Operating Agreement?

An LLC must decide if it will be managed by all the members or by a limited number of managers. In this regard, it is important to have a written agreement known as an Operating Agreement spelling out the rights and duties of the members and managers, if any. This is also a good document in which to include other rules governing the LLC. Even if an LLC has only one member, a membership agreement should be signed to formalize the LLC and make it clear that the member is not personally liable for the debts of the business.

What is a Registered Agent?

The Registered Agent (in some states referred to as the resident agent) is the person designated by the LLC to receive legal papers that may be served on the LLC.

Does an LLC need a Registered Agent?

Yes. An LLC is required to have a Registered Agent in the state in which they are formed.

Who can Serve as an LLC’s Registered Agent?

In general, a member or manager of the LLC if located in the state of formation. An LLC may also designate another person or company who qualifies as a registered agent in the state in which the LLC is formed.

How do I Change the Registered Agent or Registered Office Address?

To change the Registered Agent or registered office, you must file paperwork with the secretary of state and pay the appropriate fees.

How Long does it Take to Form an LLC?

In most states formation can take just a few minutes provided you are familiar with the proper electronic forms to file.

How is an LLC Owned?

LLC ownership can be expressed either (1) by percentage or (2) by membership units which are similar to shares of stock in a corporation. In either case, ownership confers the right to vote and the right to share in profits.

What are Member-Managed and Manager-Managed LLCs?

One initial decision you will need to make is whether the LLC will be member-managed or manager-managed. Stated in another manner, will all of the members have equal control of the company’s business or will there be one or more people who control the business while the others are mostly silent?

Does an LLC protect it’s Owners / Members from Liability?

Yes. One of the primary advantages of an LLC is that its owners, called members, have “limited liability.” This means that, under most circumstances, they are not personally liable for the debts and liabilities of the LLC.

How is an LLC taxed?

By default, an LLC is taxed as a pass-through entity or disregarded-entity. As such, the LLC’s profits pass through to the members’ personal income for tax purposes.

Does an LLC have to pay State Taxes?

Check with a qualified tax professional regarding your state’s tax laws for LLCs. Generally, if you will be collecting sales tax or will pay wages subject to unemployment tax, you may need to register with any state in which you sell goods or have employees.

Does an LLC need a separate Bank Account and Other Financial Implements?

Yes. Of note, most banks have set up reasonable fees for small businesses, such as charging no fees if a specified minimum balance is maintained and there are Numerous Credit Cards that cater to new, small businesses.

Are there Any Limitations on Salaries for an LLC?

Generally, no. The members and/or managers can generally set whatever salaries they want for the LLC.

Can an LLC Distribute Profits to its Members?

Yes. When profits allow, an LLC can distribute lump sum payments among its members. How distributions are made is usually set out in the Operating Agreement. If the Operating Agreement is silent as to distributions, the LLC should follow state law. Also, it is always recommended to check with a qualified tax advisor as to the best way to take out profits in your given situation.

Do I need to Renew my LLC?

In most states, the LLC must file an report every year known as an Annual Report. A few states only require a report to be filed every other year known as a Biennial Report. Regardless of the frequency of the filing, the report usually requires that you fill out a form maintaining an up-to-date record of the status of your company, including the company name, address and member names with the state office or agency which received the original Articles of Organization for the LLC.

Can I Amend my LLC?

Yes. LLCs are flexible enough to allow for amendments as needed.

Why should I have The Trademark Company form and maintain my LLC?

We’ve helped over 100,000 businesses get started. Our experience coupled with our systems translate to faster formation times and worry-free annual compliance for your business. So when you’re ready Let’s Get Your LLC Started.

LLC FAQs