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Create a Limited Liability Company (LLC) in 6 Easy Steps
There are many benefits to setting up a limited liability company (LLC). An LLC can help you protect your assets, give your business a professional reputation, and save on taxes. LLCs can have many different owners, called members, and are often the best business structure for small businesses. Unlike a corporation or partnership, LLCs are relatively easy to set up and manage. If you’re thinking of starting an LLC, the process is relatively simple. This article will walk you through the six steps you need to take to get started.
1. Choose a Business Name
The first step in forming an LLC is to choose a name for your business. When selecting a name, you’ll want to make sure it’s available and meets all the requirements. The LLC division of your Secretary of Wisconsin State office can tell you how to start an LLC in Wisconsin and what’s allowed in your state, and whether or not another business is already using the name you want. You’ll also need to ensure that your chosen name isn’t too similar to any existing businesses, which could confuse customers.
Along with the statewide search, make sure that your company name doesn’t violate any trademarks held by other businesses. You can search the U.S. Patent and Trademark Office website for a list of existing trademarks in your area.
2. Draft an Operating Agreement for Your LLC
All LLCs must have an operating agreement, which is essentially a written contract between the company members that outlines each member’s responsibilities and rights within the business. The operating agreement is typically only used if multiple owners are involved, but it’s still important to have one even if you’re starting an LLC independently. Several key elements should be included in your operating agreement. These include:
- Names and contact information for all members
- The percentage of ownership each member holds in the business
- The responsibilities and roles of each member, along with any other agreements between members
- Any procedures or processes that will be followed to address disputes within the company
The exact contents of an operating agreement can vary depending on your specific business needs. However, it’s important to have one prepared before you register your company with the state, as not having a formalized operating agreement can make it difficult to resolve disputes or disagreements once your company is up and running.
3. Register Your Business with the State
Most states require you to fill out a simple form that includes basic information about your company, including its name, registered agent (a person or organization authorized by the LLC to receive legal documents), and address. With this initial registration paperwork, you may need to pay a small fee for your business to be officially recognized by the state. This ensures that your company can open bank accounts, file taxes, and legally conduct other standard business operations.
4. File Articles of Organization for Your LLC
One of the key documents required for an LLC is the Articles of Organization. This document states that you are starting a limited liability company and serves as basic information about your business, including its name, address, and members. To register your business with the state, you’ll need to file this document and any other necessary forms or paperwork. You may be asked to pay additional fees depending on your state’s requirements.
5. Obtain Any Necessary Licenses or Permits
Depending on the type of business you’re operating, and where it’s located, you may need to obtain special licenses or permits before opening up a shop. It can be good to check with your city government’s business office or website to see what licenses or permits you may need. For example, if you’re starting a restaurant, you’ll likely need to obtain a food license and any other general business licenses required in your city. If you’re planning on selling alcohol, you’ll also need to get a liquor license.
6. Open a Business Bank Account for Your LLC
One of the final steps in setting up your LLC is opening a business bank account. This account will be used for all financial transactions related to your company, and it’s important to keep personal, and business finances separate to avoid any issues down the road.
When opening a bank account, most banks will require that you show proof of your business registration and other important documents like your Articles of Organization. Once your account is set up, you can start depositing company revenue and making business purchases with the help of a checkbook or debit card associated with this bank account.
Creating an LLC is a relatively simple process that can provide your business with some important legal protections. By following the steps outlined above, you can have your LLC up and running. Just be sure to stay compliant with state requirements and file any necessary paperwork quickly to avoid penalties or fines.