Starting a New Business: How to Form an LLC in 1 Afternoon
We recently needed to form an entirely new company from scratch. Being entrepreneurs, and having limited spare time, we needed a way to do it as quickly and efficiently as possible. In the end, we were able to do everything, from verifying our business’ name to obtaining a tax ID to registering with the Secretary of State, all in one afternoon.
Of course, you shouldn’t create your own LLC in one afternoon unless you’ve already put in a great deal of time and thought. That said, we’d like to show you it’s actually much quicker and easier to form an LLC than you might think. We’ve laid out our experiences below in hopes that it helps others interested in forming an LLC understand the process, and to show just how quickly and easily it can be done.
1. Go to the Secretary of State’s website for the state you reside in. Do a search on their site to see if anyone else has the same LLC name you are wanting to register. If so, think of another name, preferably a better one. If not, go to the next step.
2. Because we wanted to make sure there were no problems forming our LLC, we registered the LLC before opening up a post office box in the name of the business. Luckily, when registering an LLC, there is really only one place on the form that needs your mailing address; the rest of the information actually requires a physical address. After registering, we opened up a new P.O. box in the business’ name, logged back into our account with the Secretary of State, and changed the P.O. box. We used the physical address everywhere else on the form.
3. Create an account and login to your local Secretary of State’s website, then go to Corporate section of the website. There should then be an online Business Filing Section where you’ll have to be logged in to actually use those services.
4. Once in the Business Filing Section, there should be a section for registering a LLC. Enter all of the appropriate information. It will ask if you want a domestic or foreign LLC. The word foreign just means the primary location of your business is outside the state in which you reside. You will also be asked if it is a Manager or Member LLC. Most people who set up an LLC choose Member, meaning that all the members share responsibility for the day-to-day running of the business. A Manager LLC is when the members appoint someone to manage the business that is usually not a member. When we set ours up, we chose to form a member LLC. Keep in mind, you’ll have to list the physical address of each member. The price to register our LLC was $51.25.
5. Be sure to download and/or print the Articles of Organization and the Certificate of Organization for your LLC from the Secretary of State.
6. At this point, we also wanted to register a fictitious name or DBA (Doing business as). This can also be done on your local Secretary of State’s website. We searched to make sure no one else had the same name, and then proceeded to fill in the information. It cost us $8.25 to register our fictitious name, and it’s valid for 5 years. *Note: When we filed for the federal tax id number, we did NOT list it as a DBA or put the fictitious name anywhere on that form.
7. At this point, we went to IRS.gov and registered for a Federal Tax ID number. We did this before getting the business p.o. box, which meant we had to go back, print a form, and send an address correction. Because of this, if we had to do it over again, we would register the LLC first, then go open up a p.o. box, then apply for the Federal Tax ID number last.
8. At the IRS.gov website we typed “Federal Tax ID” in the search box, which took us to a page with all kinds of information about federal tax id numbers. There was also a “Apply for an EIN Online” link to click on. If you do, it will ask you some questions and give instructions for applying for your new Employer Identification Number.
9. Once you have filled out the EIN form and the process is complete, you will be issued a federal tax id number immediately. Be sure to download and/or print the Federal Tax ID Confirmation, Federal Tax ID Registration and the Federal Tax ID Confirmation Letter. You will see a portion at the bottom of the letter where you can print and cut the portion for any name and/or address changes. If you make a mistake or want to change something (as we did with the P.O. Box), just make the correction on the paper and mail it to the address shown.
10. Once we got all of this done, we wanted to open up a checking account for the new business. You will need a picture id, the Articles of Organization, and Certificate of Organization, as well as the IRS Confirmation Letter. Anyone you want to have signing rights will need to bring in valid picture id for the bank to verify.
11. Go to the county in which you reside (or plan to do business) and see if you are required to register for a Merchant’s License. If you are in a business where you collect and report sales tax, the county will want their share as well. This will usually need to be renewed yearly. Our annual fee is $25, but the price may vary depending on where you live.
Forming an LLC can be a daunting task, especially when the would-be entrepreneur’s head is already filled with a thousand different tasks and a million different responsibilities. But knowledge is half the battle, and having someone explain what to expect can make a huge difference in how quickly and painlessly your LLC takes shape. We hope this article helps clear up some of the confusion around forming an LLC you might experience, and we hope it helps you better prepare for the business battlefield ahead of you.
By Eric Streeter