As you know, starting your own company is not an easy task. If you have done any type of research, you have probably realized this fairly quickly. Not only do you have to deal with online visibility and marketing, potential partners and clients, but also with the merchandise or services that you want to offer, and a business plan that has to be bullet-proof if you want to succeed.
Yes, this can be overwhelming, but there is one thing that some future business owners forget – the legal structure of the company. There are numerous types of this structure, but in this article, we are going to focus on the limited liability company (LLC) simply because it is currently the most popular one. The main question is whether you can launch the LLC one your own or do you need some help. Well, upon reading this article, you will have all the significant answers.
Can you do this on your own?
Basically, the answer is yes. Regardless of the state, you have the legal right to launch the limited liability company. However, keep in mind that this can be a complex process, especially if you are about to start your first business and have little knowledge regarding this process. There will be paperwork you will have to deal with, laws and regulations of your state that you will have to become familiar with, and so on.
If you are not prepared to do some hard work, but instead would rather focus on organizing your company and preparing the merchandise, you might want to leave this job to someone else. It is something that can be done by an attorney or accountant, but there are also some companies that provide their clients with these services. If you are not sure who should complete this task for you, our advice is to visit startupsavant and explore your option.
Nevertheless, since this is something that you can do on your own, we are going to tell you about some essential steps that you should take. Keep in mind that laws differ between states, so make sure to check whether each of these points is valid in yours.
Name your company
Obviously, this is the very first thing that you should, but still, there are some things that you have to consider. Generally speaking, each state has certain requirements that the name must meet. First of all, it has to be unique, meaning that you cannot go with the one that is already taken by another company or the one that resembles it even slightly.
Secondly, you have to incorporate “LLC” into the name. This is obligatory for all the states, and most of them also won’t allow you to use words such as “city”, “corporation”, “incorporated”. If you already have an idea of what the name of your new company will be, you can visit the government website, choose your state, and check if it is available.
Organize the management
Your next step should be to decide who will run the business. You have two options – the member-managed or the manager-managed LLC. The former one is most commonly used, and it basically means that all partners are equally included. What’s more, if you don’t create this structure on your own, the state might do it for you, because this is usually the default structure. The latter is not so frequently used, but it can be quite beneficial if some partners desire to be passive investors.
File “Articles of Organization” Form
This is a document that contains some basic information about the company, such as the name, business address, purpose, information about the registered agent, i.e., the person who will receive all the legal documents and the names of founders. There is no need to include any additional details regarding the structure and management. You will send this document to the state, and you will have to pay a fee that is usually between $100 and $300, depending on your area.
Hire a registered agent
We have already mentioned this agent in the previous paragraph, but let us tell you more about their job. Put in layman’s terms, this is a person who will receive all the legal documents in case your business gets sued. Their job is to make your life easier since they will get all the important papers, so you can rest assured that you won’t miss an important deadline. One more thing, this person has to be someone outside your LLC.
Write an operating agreement
If you are the sole owner of the LLC, you don’t need this document. On the other hand, if you have at least one partner, then you have to write this agreement to protect your business. This is a document that will define the structure of your LLC, management, finances, as well as the list of responsibilities of each of the initial members.
Preparing this agreement might take some time simply because you have to decide what it will include. For example, it should include the percentage of the ownership of each person, the voting structure of the company, under what conditions can one of the members leave the company, what happens if the LLC need additional capital, and so on.
As you can see, this agreement can be quite lengthy and complicated, so you should write it together with your partners. Discuss each point and make a decision together and ensure that you are all on the same page. In addition, this is something that you should do well in advance simply because sometimes one of the members wants to back out upon hearing the whole deal, so you should ensure that you have enough time to make the necessary changes.
It is of utmost importance that all of you agree on all the points and terms since it is the only way to successfully launch a company and lead it down the right path. One more thing, upon writing this agreement, you should have a lawyer inspect it, just to make sure that everything is defined perfectly.