You Can File an LLC for Free, Online In Minutes
Starting a business is an exciting venture, but it can also be daunting, especially when it comes to creating a legal entity for your business. One of the most popular types of legal entities for small businesses is the Limited Liability Company (LLC), which provides personal liability protection for its owners while offering the flexibility of a partnership.
Creating and filing an LLC typically involves legal fees, but did you know that it is possible to do it for free? This process can be done on your own by following a few simple steps. In this guide, we will walk you through the process of creating and filing an LLC for free, including the necessary forms and documents, state-specific requirements, and tips to ensure a successful LLC formation. With this knowledge, you can confidently create an LLC and start your business without breaking the bank.
Six Steps to Forming an LLC for Free
Pick a Business Name
Selecting an appropriate name for your LLC is crucial, and it is essential to ensure that it is not being used by any other business in the state. Each state has specific naming regulations, and we offer a comprehensive guide to help you choose a suitable name and verify its uniqueness. Your LLC name must comply with certain criteria, including being unique, ending with "Limited Liability Company," "Limited Company," or "LLC," being clear and unambiguous, and meeting the state's legal requirements. Additionally, your LLC requires an official address, which varies depending on the state you are operating in.
Appoint a Registered Agent Service
All Limited Liability Companies (LLCs) are required to have a Registered Agent responsible for receiving official notifications and correspondence related to the business. As a business owner, you have the option to act as your own Registered Agent, appoint another LLC manager as the agent, or use a professional Registered Agent service. It is mandatory to provide your Registered Agent's details in your company formation document.
At BusinessFormation.io, we offer access to a complimentary Registered Agent service for the first year as part of our highly-rated options of business formation service companies. If you are unsure whether you should act as your own Registered Agent, it is essential to research and understand the role and responsibilities of Registered Agents before proceeding with your business formation.
Get an Official Formation Document from Your Secretary of State
To create an LLC, you must obtain an official company formation document from the relevant agency in your state. This document is referred to as the "Articles of Organization," "Certificate of Formation," or a similar name, depending on the state. Our comprehensive guide to forming an LLC in each state includes links to the relevant agency's website.
You can typically download a fillable PDF or Word file of the necessary document, and some states allow online filing. Review the document to determine any additional information required.
If you are forming an LLC with others, you must collect and provide their information, including their names, addresses, and ownership percentage in the new business. Additionally, you must provide details such as your business name and address, Registered Agent information, the company's purpose, and the incorporator's name.
Explore The Types of LLC Filing Options
Limited Liability Companies (LLCs) are a popular legal entity choice for small businesses due to their flexibility and liability protection for owners. There are several types of LLCs, and BusinessFormation.io has shared insight in the 8 types of LLCs, as each are designed for specific purposes.
Single-member LLCs are the simplest type of LLC, ideal for small businesses with only one owner. Multi-member LLCs are designed for businesses with multiple owners, where each member has a percentage of ownership.
Series LLCs allow a business to create separate "series" or divisions within the LLC, each with its own assets, liabilities, and operations, and our LLC filing options are capable of multi entity registered agent services. Professional LLCs are intended for licensed professionals, such as doctors or attorneys, and offer personal liability protection for the actions of other members in the LLC.
Choosing the right type of LLC for your business depends on your business structure, goals, and operations. It is essential to consult with a legal professional to determine the best option for your specific needs.
Draft and Sign the LLC Operating Agreement
Although not required by law in many states, creating an operating agreement for your LLC formation is a good practice, particularly if you have other members in your LLC.
A typical LLC operating agreement should include the following details: responsibilities of all members, each member's interest percentage, distribution of profits and losses, voting rights of each member, and LLC management.
It also outlines how the management structure changes when a member leaves and how their profits are redistributed. If you are a single-member LLC, you can create an operating agreement yourself. If you are unsure whether you need an operating agreement, seek the advice of an attorney. The expense is worth it, especially for a multi-member LLC.
Complete and File Your LLC Formation Document
After obtaining the formation document, the next step is to complete it, ensure its accuracy and submit it to the relevant state agency. This process can be somewhere cumbersome and the Secretary of State portals for each state all offer their own nuances. If your paperwork is not complete or contains any inconsistencies, the business filing attempt will be rejected in most cases. This is specifically way many business leaders, both new and experienced, choose to utilize a professional business filing service. To streamline the process, click the following text to view the Top 3 LLC Filing Services as ranked by thousands of customer reviews.
To form your LLC, you will need to pay the state fee, and usually wait for a certain period (although expedited filing is available in some states). The following information is required to be filled in briefly:
- Your business name
- Your business address in the state of formation and primary conduct
- The objective of your business
- How your LLC will be managed
- Registered agent information
Immediately After Filing Your LLC or Corporation
Congratulations on successfully filing your LLC or new corporation! But your work isn't done yet.
After filing your LLC, there are a few essential steps you should take immediately to ensure your business is set up for success. These include obtaining an Employer Identification Number (EIN), applying for trademarks to protect your brand, and researching if there are any specific business licenses required for your industry and location. Below, we'll cover what you need to know about each of these critical next steps, so you can take action with confidence and ensure your LLC is on the path to success.
Get Your Employee Identification Number from the IRS
An Employer Identification Number (EIN) is a unique nine-digit number assigned by the IRS to businesses for tax purposes. It's also known as a Federal Tax Identification Number.
All LLCs are required to obtain an EIN number, regardless of whether or not they have employees. Obtaining an EIN number is a simple process and can be done online through the IRS website. You'll need to provide some basic information about your business, such as its legal name, the state in which it's registered, and the names and social security numbers of any owners or officers.
Once you submit your application, you'll receive your EIN number almost immediately, which you can use to open a bank account, file taxes, and conduct other business-related activities.
Think About Your Business Name and Consider Using a DBA
A business DBA (Doing Business As) is when a company operates or does business under a name other than its legal name. This is also known as an "assumed" or "fictitious" name. A business may choose to use a DBA name for various reasons. It allows them to conduct business using a name that is different from their legal name, which can be helpful in creating a distinct brand identity or making it easier for customers to remember their name.
For example, if a business has a long, complicated legal name, they may choose to use a shorter, catchier DBA name for marketing purposes. Additionally, if a business wants to expand into a different area of business or create a new product line, a DBA name can help differentiate the new venture from the existing one.
To file a DBA, you need to submit the relevant form to your state's agency responsible for company formation. However, if you prefer to use your legal business name to conduct business, you don't need to file a DBA.
Apply for Required Business Licenses and Permits
To operate legally, most businesses require licenses and permits. These requirements may be imposed by your city, county, or other government agencies for your industry or sector.
To ensure compliance, you need to research and understand all the requirements you must meet. The Small Business Administration offers a useful guide to federal permits, and you can consult your local and state authorities for information on local regulations. If you don't have the time or resources to navigate the complex world of business licenses and permits, we can provide assistance.
File Your Annual Business Report and Pay Mandatory Fees
To maintain good standing with the state government, most businesses are required to file an annual report. Included in this, there may be mandatory fees related to franchise taxes, employee taxes, and other mandates to remain in good standing. However, the requirements for this vary from state to state. Also, the rules may change with little notice and it may become cumbersome to keep up with state compliance updates. This is particularly why many companies opt to utilize the expertise of a professional LLC formation and registered agent service.
Failure to stay compliant with your local jurisdictions most often result in additional taxes or penalty fees. In cases when a company becomes delinquent, a business may be involuntarily dissolved, thereby removing a company of its legal status to operate.
The annual reports that most states require typically shares essential information about the business, and a nominal fee must be paid upon filing. To find out about the specific ongoing filing requirements for your state, you can refer to the appropriate resources.
Determine Your Desired Tax Status
Businesses can determine their tax status by evaluating their business structure and goals. For example, a sole proprietorship or partnership is taxed as a pass-through entity, meaning the business income is reported on the owner's personal income tax return.
On the other hand, a corporation is taxed as a separate entity, with its income being taxed at the corporate level and again at the individual level when dividends are paid out.
Additionally, businesses may consider factors such as the number of owners, liability protection, and potential for growth when choosing their tax status. It is important for businesses to consult with a tax professional or attorney to determine the best tax status for their specific circumstances.
Summing the process of forming an LLC for free, it should go without saying that starting a business can be a complex process with many different steps and requirements to consider. From choosing a business entity type and obtaining necessary licenses and permits to obtaining an EIN and complying with ongoing filing requirements, there are many things to keep in mind.
It is important to research and understand each step in the process, as well as seek professional assistance when needed. By taking the time to properly form and register your business, you can set a strong foundation for future success.