How To Establish An LLC Yourself - ELIZABETHSTAPLETON.COM (2024)

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If you are working for yourself or running your own business, you may hear the term LLC thrown around. Generally, as people telling you your business should be an LLC. But what is an LLC and how complicated is it establish an LLC?

First, LLC stands for Limited Liability Company; I’ll explain more in a sec. Second, it’s easy to set up an LLC yourself, you don’t have to hire a lawyer, but you certainly could if it would make you feel better.

What is an LLC?

As I already mentioned, LLC stands for limited liability company. What that means is that if somebody goes after your business, like in a lawsuit, your personal assets are protected. You won’t be held personally accountable for the company’s debts or liabilities.

So why the limited part? Well, it can vary by state, but generally unlike a corporation, if a member of the LLC dies or files for bankruptcy the LLC has to be dissolved.

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Additionally, an LLC acts differently in that it allows for flow-through taxation. Meaning the money is only taxed once. The money/income flows through to the LLC owner or member, and they pay the usual income tax and other taxes that apply.

Unlike a corporation which is taxed on its revenues then pays you and you are also taxed, resulting in double taxation.

How to Establish an LLC

If you want to establish an LLC, then your state’s Secretary of State website is going to be your best friend. Though to be honest, not all secretary of state websites are created equal. It can sometimes be tough to locate, so I’ve linked to the various state’s websites below.

But before we get to that, let me walk you through the general steps to creating an LLC.

Make Sure Your Desired Business Name is Available

Once in the Corporations section, run a search on the name you want to use for your business. If it is already being used, you are almost guaranteed to have your LLC application turned down. Though there can be some exceptions.

Find Out If You Can Apply Online or If You Have to Do So by Mail

Most states allow you to submit the documents necessary to establish an LLC online. However, you will want to find out the correct process.

While reading up on the process, you will also likely learn what documents you will need to submit to establish your LLC.

It is typically an Articles of Organization or Certificate of Organization.

Complete Your Articles of Organization

Again depending on the state, these may be called Certificate of Organization or some other name.

The Certificate of Organization usually asks for:

the name of the company,
location,
name of the owner,
and name and contact information for an agent.

It may also require you to describe your business briefly. If you are struggling with what to write as a description, you can use the corporation’s search to find similar businesses and see what they wrote.

Submit Your Articles of Organization with the Required Fee

A fee is almost always required to register an LLC.

However, the cost of the fee varies greatly by state.

Some states it may be as low as $45, others can be as high as $500. This fee is typically recurring annually so make sure you set aside this amount during the year so you can renew your registration.

Wait

Depending on the state, how long you have to wait to find out if your registration has been accepted can vary, especially if you had to submit it via snail mail. Though I’ve seen same day responses for LLC registrations submitted online.

Why Do I Always Hear About Delaware?

One of the reasons big companies register in Delaware is because Delaware offers Series LLCs which I won’t get into today. I will say that if you are a new business owner, then unless you actually live in Delaware, there is no need to establish an LLC in Delaware.

If you do register in Delaware, you will likely still be required to register as a foreign LLC in your home state. Meaning you just have to pay more in registration fees each year.

That’s It

While you can certainly hire a lawyer, as you can see, you can establish an LLC in your state without too much difficulty. Just make sure to read up on your Secretary of State’s website.