When you decide to start a business, one of the most important steps is deciding what business structure to use and establishing your business. An LLC—short for limited liability company—is one of the most popular business structures, thanks to its ease of formation and maintenance, its pass-through taxation and the liability protections it provides to business owners."

Getting an LLC can be a quick and affordable process, depending on whether you do it yourself or enlist the help of a third party. Learn how to set up an LLC, the pros ✅and cons of doing so, the costs associated with LLCs, and more.

How to Start an LLC

Arඣe you considering forming an LLC? Here’s a step-by-step guide:

1. Choose your business name: Before establishing your LLC, it’s important to choose a name for your business and make sure it isn’t taken. You’ll have to provide this name on your articles of organization.
2. Designate a registered agent: Each LLC is required to have a registered agent, who serves as the point of contact for your business, and resides in the state in which your LLC is formed. In many cases, the registered agent is the business owner, but it can also be someone else.
3. Complete and file articles of organization: The articles of organization are the document that establishes your LLC. In most cases, you can complete and file this form on your state’s official website.
4. Create an operating agreement: Depending on where you live, you may or may not need an operating agreement to establish an LLC. You may not be required to file your operating agreement with the state.
5. Keep your business in good standing: Once you’ve established your LLC, your work isn’t done. In most states, you’re required to file an annual report to maintain your LLC.

Pros & Cons of Forming an LLC

An LLC protects owners fro💮m personal liability🐻. Without an LLC, you and your business are considered one entity. If your business is liable for something, so are you as the business owner. However, the LLC creates a separation between you and your business. In other words, if your business is subject to a lawsuit or other legal trouble, you may be protected.

Another important advantage of an LLC is the pass-through taxation. An LLC isn't subject to corporate taxes. Instead, all profits and losses are pass🎃ed along to the owners. Your business proꦚfits are only taxed once.

A final key benefit is that, in most states, LLCs are relatively easy and affordable to establish and maintain. In many cases, forming an LLC could be as simple as completing an online form. And though all states charge a fee to establish your LLC, fees can be as low as $50, and some states allow you to renew each year for free.

That being said, having an LLC isn’t without its negatives. Not every state makes it affordable to set up and annually renew your LLC. For example, California requires that all LLCs pay an annual tax of at least $800. And if your business income exceeds $250,000, you’ll pay an additional fee ranging from $900 to $11,790, depending on your income.

What You Need to Form an LLC

An LLC is a relatively 🐈simple business structure, and as a result, there’s relatively little documentation needed to star𝓡t one. Here’s what you’ll need to form your LLC.

Articles of Organization

Your articles of organization is a form that you file to create your LLC. This form includes basic information about your business, including t♒he name of the business, the name and contact information of the registered agent, the location of your business, and the name and address of each organizer of the business. In most states, you can complete and file 🅰this form online.

Operating Agreement

Depending on your state, you may be required to create an 澳洲幸运5官方开奖结果体彩网:operating agreement for your business. E🍬ven if your state doesn’t require an operating agreement, it’s still advisable to have one.

An operating agreement is a legal document governing your business. It dictates factors such as your business structure and how ownership and profits are divided. It states how decisions will be made within the business and lays out the rights and responsibilities of each member.

Other Documents

The articles of incorporation and oper☂ating agreement are the only documents likely to be required to form your♐ LLC, but there are other documents that may be helpful in establishing your business or that may be required down the road. Here are a few examples:

• Name reservation application: Some states allow you to reserve your business name before registering your LLC. Name reservations are generally only good for a certain number of days, such as 90 or 120, and require a fee.
• EIN: An 澳洲幸运5官方开奖结果体彩网:employer identification n𒐪umber (EI♚N) is your business’s tax number. While an EIN is only required if you have employees or are required to complete certain tax forms, it’s best to have one in all situations rather than use your Social Security number.
• Business license: Depending on where your business is located, you may need certain business licenses and permits, including a seller’s permit, general business license, or DBA (short for “doing business as”). 

• Annual report: Many states require LLCs to file an annual report with the appropriate government agency. These annual reports require an owner to share basic information about the business and any changes in the business’s structure or ownership.

Costs of LLCs

Establishing and running an LLC requires some expenditure, but it doesn’t necessarily have to be expensive. Your total costs will vary depending on where you live and whether you hire a third party to help you with your LLC.

Here are some of the costs associated with forming and maintaining the status of an LLC:

• Filing fee: Each state charges a one-time fee to file your LLC articles of organization and establish your LLC. This fee ranges from just $50 in some states to $300 or more in others. The average LLC filing fee is $129.
• Initial report: California and Nevada are the only states that require you to file an initial report when you establish your LLC. California’s fee is $20 and Nevada’s is $150.
• Annual report: Almost every state requires you to file an annual report each year to keep your LLC in good standing. The average annual report fee is $104, though in some states it’s as low as $0.

Aside from the required fees, you may also incur some additional costs if you hire a third party to help you establish and maintain your LLC. For example, you might pay an upfront fee to have your articles of organization and operating ꦺagreement drafted and filed. You might also pay annual fees for a registered agent or annual report filing.

Finally, there are other costs assoc💞iated with starting and maintaining your business that aren’t necessarily associated dirꦬectly with the LLC. These costs could include business licenses, a DBA, and more, all of which will vary by state.

Best LLC Filing Services

Alternative Business Types

An LLC is just one business structure you can choose. The right type of business structure for you depends on the type and size of🀅 your business and your unique needs. Here are some alternative business types to consider🧜.

• Sole proprietorship: A sole proprietorship is the most basic type of business. In fact, you automatically have one if you don’t register as another business type. This type of business enjoys the pass-through taxation of an LLC, but without the protection from personal liability.
• Partnership: A 澳洲幸运5官方开奖结果体彩网:partnership is a business that’s owned by two or more people. Partnerships can come in different forms, including limited partnership, in which all but one partner have limited liability, and a limited liability partnership, in which all partners have limited liability, similar to an LLC.
• Corporation: A 澳洲幸运5官方开奖结果体彩网:corporation is a business that’s entirely separate from its owners for legal purposes. Owners enjoy the limited liability of an LLC, but profits are taxed at the corporate level before they’re passed along to owners and/or shareholders.

What Are the Disadvantages of Starting an LLC?

The biggest disadvantage of 澳洲幸运5官方开奖结果体彩网:starting an LLC is the cost. Unlike a 澳洲幸运5官方开奖结果体彩网:sole proprietorship, an LLC isn’t fr🌟ee to establish or maintain, and the expenses can be quite high i🦩n some states.

How Long Doe🐻s It Take to Get Approved for an LLC?

How long it takes to form an L﷽LC depends on where you file. The approval time can b♋e as short as a few days to as long as a month or more, depending on the state and whether you pay extra for expedited filing.

Is It Hard to Get Approved for an LLC?

In most cases, it’s quite easy to get approved for an LLC. There’s generally only one document required—or two, in some sta♑tes—which can be filed online with your state. However, there are also steps required to maintain your LLC status, so it’s important to research your state’s rule♎s. 

What Is the Cheapest Way to Start an LLC?

The cheapest way to start an LLC, in most cases, is by filing the paperwork yourself directly with your state. Most states have a relatively simple process required to form an LLC, which means you won’t necessarily need the help of a third party. However, if you have a more complex business situation or want the help of a seasoned professional, you may want to pay for an 澳洲幸运5官方开奖结果体彩网:LLC filing service.

What Are the Benefits of Owning an LLC?

The biggest 澳洲幸运5官方开奖结果体彩网:benefits of an LLC over other business types are the pass-through taxation and 🍷the limited liability for owners/members. An LLC is the only single-member business structure that offers this combination of benefits.