Creating an LLC

Creating an LLC

What do I need to do to become an LLC?


What do you need to create an LLC:

  • You need to file a certificate in the state in which the LLC will be formed. This could be called a certificate of formation or articles of organization or some other name.
  • An operating agreement should be prepared and signed. This is analogous to a shareholders' agreement for a corporation
  • You should consider having a company kit and stock certificates.
  • You should consider having minutes.

How can you accomplish the above:

You could go to your state's website and form one on your own for a modest fee. You could hire one of the on line companies that do this for a few hundred dollars. You could hire an attorney for a good bit more. If it were me, I 'd hire a corporate/business attorney and spend even more than all the other options but get the job done right. There are too many issues that need to be addressed to handle this on your own. Here are some issues to address:

  • Is an LLC the optimal structure for the activity or business?
  • Are other arrangements, entities or structures needed? Example, a common business structure is to set up an LLC for the real estate on which the business operates and a second LLC for the actual operations, to protect the passive asset from the business risk.
  • How should the LLC be structured and treated for income tax purposes? LLCs which are one-member could be a corporation or a disregarded entity, multiple member LLCs could be partnerships. The differences can be significant.
  • What state should the LLC be formed in.
  • Should it be member managed or manager managed and what rights should each have?
  • What provisions should be included in the operating agreement.

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