Forming an LLC can seem daunting and intimidating at the outset, but it can actually be fairly simple once you've got a good understanding of how an LLC works. In this detailed examination of How To Start An Llc, break it all down into its essential parts so you can know exactly what to expect as you begin this important process. After all, starting an LLC is pretty much like starting any other business - you'll need to prepare the forms, register the LLC with the state, and set up the office where you'll do all your business dealings. The good thing about having an LLC is that these things are taken care of for you by the professionals right at the LLC's office. But while that can make things a lot faster and convenient, you'll still need to know how to start an llc on your own.
The first part of how to start an LLC in the state of Texas is getting registered as an LLC. This is typically done by filing forms with the state, including an application, declaration, statement, and additional articles. While this is not the only step in the process, it's the first step and the one most people tend to skip. Keep in mind that all LLCs are treated the same way by the state, even for tax purposes, so by getting registered and beginning the process of incorporating, you're formally saying that your company has some sort of limited liability, or "pass-through" status, which can be a significant asset when it comes to gaining some tax advantages.
If you're incorporating as an S-corporation instead of a C-corporation, you will also be required to register the LLC. Your chosen lawyer will draw up the appropriate forms for you, so don't hesitate to pay close attention to his or her instructions. If you decide to incorporate as a C-corporation instead of an S-corporation, you can still choose a qualified lawyer to help you complete the paperwork process, but you'll need to pay the attorney fees separately.
How to Start an LLC - Starting an LLC on Your Own
Once you've filed all of the necessary paperwork with your chosen attorney in the state where you're incorporating, you'll then move onto the second step of the process: choosing your business name. There are several options available to choose from, including names that are either registered trademarks or trademarked trademarks in another state. Also, there are generic names that may be registered, but which aren't necessarily trademarked, so you'll want to check with the state regulations regarding the name registration. When it comes to selecting a business name, you'll find that choosing the right one can have a dramatic effect on your success in your new LLC.
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The next step is submitting your Articles of Organization to the Secretary of State. An Article of Organization is simply a document that describes the nature of your business and who will be acting as its manager. All LLCs require this paperwork, and it is extremely important that it accurately reflects the nature of your business. An incorrect name or an incomplete Article of Organization can result in the invalidation of your LLC's registration with the IRS. Another great way to ensure that your Articles of Organization are valid is to conduct business through a qualified broker. A broker will take care of all of the paperwork, and he will also provide a certified copy of the Articles of Organization to your attorney, ensuring that everything is done in order.
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The third step in starting an LLC is to choose your state's tax laws. One of the most common problems when incorporating is an inability to comply with various tax laws. Because LLCs are considered "pass-through" businesses, they must pay a percentage of their profits directly to their owners (the LLC), rather than paying taxes on the portion of their profits that passed through the hands of the business owners themselves. Because of this requirement, many business owners have been forced to form an LLC in their home state, in an attempt to avoid passing through several layers of tax laws and regulations. Forming an LLC in your home state will allow you to effectively and immediately remove any possible legal hurdles that may come up while incorporating in your state.
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Once you have completed these steps, the next important thing to consider is your unique business structure. Every LLC has its own unique management structure, and choosing the right LLC Operating Agreement can make a huge difference in the success of your business. An LLC Operating Agreement is very different from, and requires different expertise than, creating a general Operating Agreement. In particular, the rules governing the distribution of dividends and capital payments between the members of the LLC and the operation of the business are completely different than the rules of any other business structure, making the combination of a unique management structure and an uniquely written LLC Operating Agreement very important.
One of the most overlooked elements of operating an LLC is the annual meetings of the LLC. Many business owners do not understand the importance of holding annual meetings of the LLC, and do not attend the meetings to support and grow the business. Holding regular meetings of an LLC is crucial to the success of the business, as it allows the members to meet with other members and exchange information, vote on matters related to the business, and gives the small business owner a way to reach potential investors. A well designed and well organized annual meeting of the LLC is highly recommended to all members, regardless of whether they have LLCs or other types of businesses.
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