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How To Obtaining An LLC

Updated on March 20, 2012
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Kate is a researcher and writer who holds a Bachelor of Science (B.S.) degree from Sonoma State University in California.

Within recent years there has evolved a new form of corporation which before hand was not too widely used or even known -- the Limited Liability Corporation or LLC. Definitely simpler to form and structure than a conventional S-Corporation or C-Corporation, the LLC is quickly becoming the corporate structure of choice by many corporate legal experts.

Below in several simple to follow steps, this article will cover:

* The simplicity of filing an LLC
* What is generally required

Who Can File Papers

Essentially, most anyone who can read and write and has a little bit of clerical experience can file LLC paperwork. Unfortunately, costly attorney fees have forced many to seek alternative routes to filing corporate entities which can be avoided with LLCs.

What Is Required

The first important thing in forming an LLC is to obtain a desired business name which complies with state regulations. By visiting the website of your own state’s corporate division or department of state, one can quickly find out if there are others with the same name and any other pertinent information one may need.

Generally, state regulations stress the name must not coincide with another previously filed business name. Likewise, it must end with the designated letters, LLC. Also, the selected name cannot include certain words such as bank, insurance, a city name or corporation. Once again, the state’s website will stipulate the regulations required by those forming an LLC.

Filing Expenses

Upon finding a proper name, some states require a small fee so as to register the name until the Articles of Organization are filed by the owner or a designated company representative. Many states charge a relatively small fee, around $100.00, to actually register the Articles of Organization -- others may charge more.

Articles of Organization, Operating Agreement and Registered Agent

The Articles of Organization is typically made up of the name of the LLC, its address and the names of all of its owner(s). It requires all owners, a/k/a members, or a selected representative to sign the document.

Likewise, an LLC's "registered agent, or "agent for service of process" is named as the designated person to receive any legal paperwork in the future.

An LLC’s Operating Agreement

While not required by law at time of filing and generally not afterwards either, the LLC’s operating agreement is a vitally important document.

Essentially, the operating agreement stipulates rules of ownership/operation of the business much as a partnership agreement or corporate by-laws would do.

Typically, operating agreements include stipulations such as:

* Percentages of investments/disbursements by member(s)
* Members' rights/obligations
* Rules for meetings/individual voting power
* Profit/loss allocations
* LLC management
* "Buy-sell" provisions - determination on member(s): wanting to sell their interest, on death, or incapacity

Publication Requirements

In some states, one must "publish" notices in local newspapers for several weeks, stating one's intent to form an LLC. Afterwards, by submitting an "affidavit of publication" to the LLC filing office and completing any license or permit requirements by local, state or Federal agencies, an LLC becomes a business.

By the above enumerated steps, one can see why the LLC is quickly becoming the corporate structure of choice of many business and legal professionals. Relatively simple to file/structure and inexpensive, the LLC is now replacing conventional corporate structures previously known.

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