Forming an LLC: The Basics

Forming an LLC requires several steps. Find out what you need to do to get your LLC off to a good start.

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forming an llc the basics

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Updated on: March 21, 2024
Read time: 4 min

Forming an LLC can provide you and your business with a variety of benefits. Organizing your company as a limited liability company requires some careful steps and documentation to ensure that you are following the law.

As you begin the LLC formation process, here are four key considerations:

1. Naming your LLC

When you start a business, the name you give your LLC may be something you've thought long and hard about. Before you get too attached to the name, you'll need to make sure it is available in the state you are filing in. If another LLC has the same name, you won't be able to use it.

You also want to be sure the name fits your state's requirements. Most states will require that LLC, limited liability company, or similar phrase be part of the name. Additionally, your state may prohibit some words from being used in the name, often words like “bank" or “insurance."

2. Choosing a registered agent

An important part of LLC formation in most states is the registered agent. A registered agent must be a person who is located in the state in which you are forming your LLC. This is the person you designate to receive legal service of process, as well as government forms and notices, on behalf of your LLC. He or she must have a physical street address (not a P.O. box).

The registered agent does not have to be anyone at your company or anyone employed by you, and does not have to be a member of the LLC. In fact, there is a whole industry of registered agent companies that you can hire to handle this on behalf of your company.

3. Completing your articles of organization

The next step to form an LLC is to work on your own or with an attorney to create your LLC articles of organization and file with your state's LLC office, which is usually the Secretary of State. You have the option of filing this yourself or doing so with the assistance of an online legal service company or a business attorney.

This document contains a lot of basic information about your LLC, including the name of the LLC and its primary address. It should also include a statement of your LLC's purpose. This can be a general statement about being formed for a lawful purpose—no other details are needed.

The articles of organization should also include information about how your LLC will be managed. You need to indicate whether the members of the LLC will do hands-on management or if there will be hired management. Another requirement is to discuss how long the LLC will be in existence (there is no limit on this, so it is fine to say in perpetuity).

Include the name and address of the LLC's registered agent, and the signature of at least one member (owner) of the LLC. There is a fee for filing this document with the state. An attorney or online legal service company can help you file this with your state's Secretary of State and help you determine the amount of the fee.

4. Creating an operating agreement

Another important component when you are determining how to form an LLC is the creation of an LLC operating agreement. While operating agreements are not required under most states' laws when forming an LLC, they are very important documents to create because they help you and any other members of the LLC organize your business, plan for the future, and put all pertinent facts in writing.

Take some time to carefully plan how your business will run and then include all of the details in your operating agreement so that you will have the information in one place for future reference. To create your operating agreement, you can also check out sample LLC operating agreements available online. However, if you think your business setup is complex or you want to make sure every angle is covered, working with a qualified attorney can be beneficial for you.

An operating agreement should include:

  • The percentage of interest each member owns in the LLC
  • What the rights and responsibilities of the members are, as well as the voting power each member has
  • How profits and losses will be allocated among the members
  • How the business is going to be managed, and the rules for taking votes and holding meetings
  • The specifics of when members can sell and buy shares from each other, such as when a member dies or wants to leave the business

With some careful thought, assistance from a business attorney, or an online legal provider, your LLC will soon be up and running.

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This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.

35 days ago
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The request I made for formation…

The request I made for formation documents was taken care of immediately and professionally. They were very helpful in getting me what I needed.

Bruce Fleishaker
112 days ago
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I had the absolute pleasure of working…

I had the absolute pleasure of working with Maria as my business formation specialist at LegalZoom, and I couldn’t be more grateful for her support throughout the process of creating my LLC. From start to finish, Maria was patient, knowledgeable, and incredibly thorough. She took the time to answer every one of my questions—no matter how small—and walked me through each step with clarity and confidence. Starting a business can feel overwhelming, but Maria made the entire experience smooth and manageable. Her dedication, professionalism, and genuine care for her clients truly stood out. Thanks to her guidance, I felt supported and well-informed every step of the way. Thank you, Maria, for your outstanding service and for going above and beyond. You are truly an asset to the LegalZoom team!

Diego Louis
147 days ago
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Using Legal Zoom made my business…

Using Legal Zoom made my business formation very easy. The program is user friendly and explains every step clearly.

Anna Silvia Mejia
176 days ago
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Legal Zoom is a true one stop shop

This is the second company I have formed using Legal Zoom. They say what they are going to do and they do it. Legal Zoom provides all the tools and services you will need to quickly start your company, allowing you to focus on your business. The business formation specialist I spoke with, Juan was great; extremely knowledgeable and professional while giving me the feeling that I was talking with an old friend.

Steve Robbins
180 days ago
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The agent was extremely helpful and…

The agent was extremely helpful and gave me the info that I was looking for. As soon as I got off of the phone with her, I got the official acceptance of my business formation!

Joshua Roberts
191 days ago
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Seamless Support from Day One

I was impressed by how quickly Alan, my Business Formation Specialist, reached out to me. Having support from day one is incredibly reassuring, especially as I navigate starting my first business. I look forward to seeing how my relationship with LegalZoom and my experience with their services evolve.

Rosemart Aoki
205 days ago
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ClarisseTravel Wine Tourism Agency

I recently utilized LegalZoom's services. The platform was user friendly, making the complex process of business formation straight forward and accessible. The customer service team was knowledgeable and responsive, promptly addressing all my inquiries. The efficiency and professionalism demonstrated by LegalZoom have provided me with confidence and peace of mind. I highly recommend their services to anyone seeking reliable business formation assistance.

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205 days ago
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The business formation specialist…

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