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What are the Best Tips for Forming an LLC?

Autumn Rivers
Autumn Rivers

Forming an LLC can be confusing since the rules tend to vary by region, but there are a few tips that are universal. For example, it is helpful to consider hiring a third party specialist to take the legal steps for forming an LLC, especially for owners who live far away from the filing location. This might be a lawyer or legal assistant, or it could be a company that specializes in incorporation, as long as they can draw up an operating agreement and act as the registered agent. Finally, it is wise to consider whether to use a fictitious name, or DBA, for the new company.

Some business owners opt to form their LLC in an area other than where they live. This is because there are occasionally financial benefits when filing to create a company in certain jurisdictions. For example, some areas do not charge corporate income tax, and have lower annual fees, which means that that one can save money when forming an LLC in such locations. Owners who choose to go this route may need to hire someone to help them file since the process usually requires a few visits to local government offices. On the other hand, hiring a company for this task is an extra expense, and is not usually necessary for business owners who live where they are filing, as long as there are not unusual necessities in regard to the paperwork.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Most companies benefit from having a lawyer at their disposal, especially when forming an LLC. This is because it is advised that members of the company form an operating agreement, which is a contract that specifies the amount of the business that each member owns, share of profits, and the duties of each owner. Additionally, all LLCs need to name a registered agent to receive legal documents, should they ever need to be delivered to the company. While this does not have to be a lawyer, many companies opt for one anyway since it is helpful to have their expertise when it comes to such legalities. Those looking to save money while still getting legal advice may choose to hire a legal assistant or a secretarial company instead.

Another consideration to make when forming an LLC is whether to use a fictitious name. It is typically required that companies file for a DBA (doing business as), in order to legally use a name other than the given name of an individual. This tends to be inexpensive, and allows the company to use one company name in public, and put a different name on official documents. Business owners who do not create a DBA when forming their company can usually do so in the future, should they ever decide to change the name, though the rules for this vary from one jurisdiction to another.

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