Paperwork. Most people hate it—but starting your own business means volunteering for a huge administrative responsibility. When selecting an entity type for your business, the administration aspect is no small factor in deciding. Those who desire to cut back on the paperwork (without taking on the risk as a sole proprietor) usually opt for a Limited Liability Company (LLC). This entity type can be a helpful hybrid between a Sole Proprietorship and a full Corporation; one can avoid being completely liable for the business without adding the administrative headaches of a corporation.
If you decide that an LLC is right for you, you'll need to know what documents to prepare and decisions about your business to make ahead of time. Whether you are starting out in business for the first time or you are considering switching your existing business, here is an explanation of the documents you will need to form your LLC, courtesy of Nellie Akalp at smallbiztrends.com. Be sure to check with your state for specific requirements. Hopefully this guidance will help clarify the paperwork headaches and get you started on the next chapter of your business adventures!
First of all, you need to compile your Articles of Organization
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Business Name – Be sure your chosen name is unique to your state's registered businesses.
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Your Business' purpose – Usually, a statement like “to engage in any lawful activity under state law for a limited liability company” is fine for most states.
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Your business' principal place of business – The address of your main location.
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The business' registered agent – If you choose to take care of all legal papers, documents, and notices yourself, you are considered your own agent, so the agent address is your own (or your business's address.) If you don't take care of this aspect, then you would need to select an agent who has a physical address located in the same state as your LLC, and include their information here.
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Your business' management structure – If your state requires it, you will include names and addresses of each manager and specify the structure: one manager, more than one, or all members are managers.
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Your business' duration – If your state requires an end date, you can usually put “perpetual” to indicate your plan to operate indefinitely.
Again, remember to check with your state for details, and always do your due diligence researching and gaining the education you need to start and run a successful business. Next blog we will discuss creating an Operating Agreement and the impact it will have to your success.
If you are interested in pursuing this option, talk to an attorney who specializes in entity formation. Need a referral? I'm happy to recommend someone I know here in CA. And if you are out of state, they may have contacts in other states to assist you.
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