All About LLC Formation and Forming an LLC
February 1, 2010-Nashville, TN--Forming a Limited Liability Company, also known as a LLC, can be a confusing process. About 20 years ago only a few states offered residents all LLC formation option, but in today’s business savvy economy every state allows the formation of an LLC. The rules however, differ in every state, sometimes dramatically, creating some confusion about how to form an LLC.
Regardless of the state there are a few important things to consider when planning for an LLC formation.
The first thing for someone to consider when wondering how to form an LLC is the LLC name. When choosing an LLC name it is crucial to pick and reserve a name that has not been trademarked by another company. Names that sound similar or are spelled similarly might not be the best choice. Research should be done with the local Secretary of State or Department of Commerce for local and foreign corporation names to avoid any trademark violation. Most business formation companies will handle this step for you and should be a huge help since they are usually more familiar with the particular state statutes.
The second thing for someone forming an LLC to decide is where the company should be formed. As previously stated the laws and regulations on LLC formation differ state to state. Research should be done on things like state residency requirements for forming an LLC, where liberal corporate laws and benefits to LLC owners apply, and where members of the LLC may be located.
Articles of Organization should be created and filed with the appropriate state officials. The state corporate filing office should have forms available for this purpose, if you plan to file yourself. This document should include the Registered Agent, who is accountable for receiving any legal-type papers issued form the state or other entities.
Owners of the formed LLC should establish an Operating Agreement. This is usually a fairly lengthy document and should spell out everything from ownership of the LLC to initial contributions from the members. Details such as what happens to the company in the event of the death of an owner can sometimes be complicated, so having experienced help with this can be useful.
In the end there are many things to consider when forming an LLC. As previously stated, sufficient research should be done on LLC formation in one’s own state since the laws and procedures can vary significantly.
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