Forming a Limited Liability Company has many advantages over operating your business as a sole proprietorship or partnership. The foremost is that your personal liability is limited in an LLC. Your personal assets will not be jeopardized due to any liability or claims arising out of the business. However, there are statutory formalities to be complied with to form a LLC. State statutes govern the formation and operation of limited liability companies. Each state has varied rules and regulations in the formation and operation of limited liability companies. It is advisable to refer to your state rules and regulations governing LLC’s to complete formalities accurately.
The basic requirement in all states is to file LLC articles of organization with the state. All states provide clear instructions on how and what to provide in the articles of organization for your LLC. Each state has different requirements for the articles of organization. The details of the founding members, purpose of the LLC and a registered agent with a local street address is required in all states. The express consent of the registered agent to act as the agent must be included in articles. You have to pay a filing fee for getting your articles filed and certified. The filing fee also varies in different states.
Some states stipulate an LLC operating agreement to be filed with the articles as a mandatory requirement. You may use any of the free LLC operating agreement examples provided by many websites. However, it is prudent to consult a professional or a lawyer to draft your LLC operating agreement to avoid any potential pitfalls. Even if it is not mandatory to have a LLC operating agreement, it is practical to have one in place for other reasons. Publishing your intent to form the LLC and its purpose is also required by some states.