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A limited liability company (“LLC”) provides many benefits and protection to its owners. When forming an LLC there are several steps you should take. Below are three key steps to setting up your LLC.
1. File articles of organization with your state.
This is a simple legal document that you must file with your state. It informs the state that you are operating an LLC. This document provides the state with basic information including who your resident agent is, your principal place of residence, and the name of your business.
2. Draft an operating agreement.
Once you have completed step 1, you will need an operating agreement. An operating agreement serves many purposes for an LLC. One thing to consider when drafting your operating agreement is the management of your company. An LLC is managed in one of two ways. First, a manager-managed LLC has a centralized management structure similar to a corporation. Second, a member-managed LLC allows the members to be more involved in the day-to-day operations of the company.
To decide which management structure is appropriate, consider whether all or some of the members will be involved in management.
3. Apply for your EIN.
Once your articles of organization are filed and you have an operating agreement drafted, you must apply for an employer identification number, commonly called an EIN, from the IRS.