Walk through forming an LLC to protect personal liability. Pick a business name, verify it's available, file Articles of Organization with a broad purpose clause, get an EIN from the IRS, handle state compliance filings, and draft an operating agreement or state law takes over.
Chapters
Here is how to set up an LLC the proper way so that you receive the personal liability protections. First, you'll want to think of the name for the LLC and then check to make sure that the name is available on the state's website and the federal uspto.gov website to make sure that you're not infringing on somebody's trademark who is selling a product or service in the same or similar category as yours. Once you determine that the name is available, you'll then want to decide who you want to list as the registered agent. The registered agent is basically the contact person for the business for when the government needs to contact your business. You can list yourself as the registered agent, or you can list a third-party company. The benefit of listing a third-party company is that it will help keep your home address off of the state's website. Once you decide who to list as the registered agent, you'll then be able to file the Articles of Organization with your Secretary of State. The Articles is basically a document that brings your LLC into existence, but when you file the articles, you'll want to make sure that you keep your business purpose very broad because you don't know whether your business is going to pivot in the future and you're not going to want to have to update the state's website. So you want to keep the business purpose very broad. Oftentimes I'll file custom articles and I'll list that the business purpose is to engage in any legal activity that's authorized in the state. Next, once the LLC articles are approved by the state, you'll then want to get the EIN number for the LLC. Make sure that you you don't get the EIN number until the articles are approved. The EIN number is basically the Social Security number for the business, and it's required to open up a bank account, and you can get it for free from the IRS.gov website. When getting the EIN number for the LLC, the IRS is going to ask for a business description, and for this, you should also be very broad, but you have to be a little bit more specific than you were on the articles. You cannot just say the that your business engages in any legal activity. Once you get the EIN number for the LLC, you'll then want to file any documents that your state requires, such as a Statement of Information if you live in California, or registering with the Department of Revenue. And lastly, you'll want to put together an operating agreement, which is basically a document that sets forth the rules of your business. It'll go through a ton of different scenarios, and it'll list who the managers and members are. If you don't have one, then the state's laws will automatically apply to your LLC, which for obvious reasons is not in your best interest. And if you're looking to have all of this done for you, then feel free to reach out.
