What is Necessary in Forming an LLC

Sometimes improperly referred to as the "limited liability corporation," the limited liability company, or LLC, is a business type similar to a partnership or sole proprietorship. It also shares some of the protective characteristics of the corporation, though it is distinctly not one. The forming of an LLC requires the completion of certain general tasks, though there may be some variation in what is required in different states.

What is first required in forming an LLC involves its intended name. When choosing a name for your LLC, you must submit it to your state's LLC division for approval. To be approved, your name cannot be the same as any other in the state, and must have a form of LLC, or Limited Liability Company after it. Once approved, the next step to forming an LLC is filing the Articles of Organization.

The Articles of Organization, also referred to in some states as a Certificate of Organization or Certificate of Formation, is a basic form filed at the secretary of state's office. This form asks for the name of your LLC, its address, and sometimes the names of its owners or members. When this form is filed you must pay a fee usually totaling around $100, though some states may require as much as $800.

When these requirements have been fulfilled, the legal aspects of forming an LLC are complete, but your business cannot officially open before you obtain the necessary permits and licenses to operate. These will likely include tax registration, a zoning permit, and a federal employer identification number.

Another step taken by most in the forming of an LLC is the writing of an Operating Agreement. Though most states don't have laws requiring it, it is a method of protecting the rights of the LLC's members, as well as laying down the expectations and parameters of all operations.