If you are looking to start your own business and want to protect your personal assets from potential legal issues, forming an LLC is a great option.
An LLC, or Limited Liability Company, is a type of business structure that combines the liability protection of a corporation with the flexibility and tax benefits of a partnership.
In the past, forming an LLC required the assistance of a lawyer, but now, with the rise of LLC formation services, it is possible to form an LLC on your own without the need for legal assistance.
In this article, we will walk you through the steps of forming an LLC using an LLC formation service, and highlight some of the benefits and drawbacks of doing so.
How To Form An LLC Using An LLC Formation Services
In this section of the article, you will learn how to form an LLC using an LLC formation service. Aside from that, you will have the option to choose any of the LLC formation companies out there to begin with.
Step 1: Choose An LLC Formation Service
The first step in forming an LLC without a lawyer is to choose an LLC formation service. There are many different LLC formation services available, each with its own set of features and pricing options. Some popular LLC formation services include:
- Incfile
- ZenBusiness
- Northwest Registered Agent
Each of these LLC formation services offers a range of packages, from basic LLC formation to more comprehensive packages that include additional services such as registered agent services and operating agreements. Be sure to compare the features and pricing of each LLC formation service before making a decision.
Step 2: Choose A Name For Your LLC
The next step in forming an LLC is to choose a name for your company. Your LLC name should be unique and not already in use by another company in your state. You can check the availability of your desired name by searching the business name database maintained by your state’s Secretary of State office.
When choosing a name for your LLC, keep in mind that many states require the use of certain words or abbreviations in your company name. For example, in most states, your LLC name must include the words “Limited Liability Company” or the abbreviation “LLC.”
Step 3: File Articles Of Organization
The next step in forming an LLC is to file articles of organization with your state’s Secretary of State office.
The articles of organization are legal document that formally establishes your LLC and includes basic information about your company, such as its name, address, and the names of its members.
Many LLC formation services will handle the filing of articles of organization on your behalf, simplifying the process and ensuring that everything is filed correctly.
Step 4: Obtain An EIN
Once your LLC is formed, you will need to obtain an Employer Identification Number (EIN) from the IRS. An EIN is a unique nine-digit number that identifies your LLC for tax purposes.
You can obtain an EIN online for free from the IRS website. Some LLC formation services may also offer to obtain an EIN on your behalf.
Step 5: Create An Operating Agreement
While not strictly required by all states, creating an operating agreement is a good idea for most LLCs.
An operating agreement is a legal document that outlines the rights and responsibilities of the members of your LLC, as well as the operating procedures of the company.
Creating an operating agreement can help prevent disputes among members, and can also provide a clear roadmap for how the company should be run.
Many LLC formation services offer the creation of a basic operating agreement as part of their formation packages.
Step 6: Register For State Taxes
Depending on the nature of your business, you may need to register for state taxes in the state where your LLC is located. This may include sales tax, payroll taxes, or other state-specific taxes.
Be sure to check with your state’s Department of Revenue to determine what taxes your LLC needs to register for and how to register.
Benefits Of Using An LLC Formation Service
There are several benefits to using an LLC formation service to form your LLC.
Cost-Effective: One of the primary benefits of using an LLC formation service is that it is typically much more cost effective than hiring a lawyer to handle the formation process. With many formation services offering packages starting at just a few hundred dollars, forming an LLC on your own can save you a significant amount of money.
Time-Saving: Forming an LLC can be a time-consuming process, especially if you are not familiar with the requirements and procedures involved. Using an LLC formation service can save you time by handling many of the steps for you, allowing you to focus on other aspects of starting your business.
Simplified Process: LLC formation services have streamlined the process of forming an LLC, making it easier than ever to start your own business. With step-by-step instructions and online filing options, forming an LLC with an LLC formation service is a straightforward process that can be completed in just a few days.
Additional Services: Many LLC formation services offer additional services beyond just LLC formation, such as registered agent services, operating agreement creation, and ongoing compliance support. These services can help ensure that your LLC remains in good standing and compliant with state regulations.
Drawbacks Of Using An LLC Formation Service
While there are many benefits to using an LLC formation service, there are also some potential drawbacks to be aware of.
Limited Legal Advice: LLC formation services are not law firms and cannot provide legal advice. If you have complex legal questions or concerns, you may need to consult with a lawyer, which can add to the overall cost of forming your LLC.
Additional Fees: While many LLC formation services offer affordable formation packages, some may charge additional fees for certain services or features. Be sure to read the fine print and understand the full cost of using an LLC formation service before making a decision.
Limited Flexibility: While LLC formation services offer a streamlined process for forming an LLC, they may not offer the same level of flexibility as hiring a lawyer. If you have unique requirements or need a customized operating agreement, you may need to consult with a lawyer to ensure that your needs are met.
In Conclusion
Forming an LLC without a lawyer using an LLC formation service is a viable option for many entrepreneurs.
By following the steps outlined in this article, you can form an LLC quickly and easily, while also enjoying the cost savings and time-saving benefits of using an LLC formation service.
When choosing an LLC formation service, be sure to research your options carefully and compare pricing and features before making a decision.
With the right LLC formation service and a clear understanding of the formation process, you can start your own business and protect your personal assets with the liability protection of an LLC.
