The LLC (limited liability company) is a highly popular business structure, especially for the startup enterprise. An LLC will be formed based on state/country laws and offers numerous advantages that are highly attractive for entrepreneurs. The problem is that you need to deal with many different things you most likely do not know much about from a legal point of view. This is why online LLC formation is usually recommended to be handled by companies specialized in this process.
Whether you decide to work with a company or not, you should still know different things about LLC formation. What should be highlighted is going to be listed below as the most important issues every owner has to consider.
Carefully Picking Where LLC Is Organized
Based on geographical location, there are different laws that apply. The LLC is always formed in accordance with specific requirements and rules. This is particularly important for online business formation in an LLC setting. The online business is not restricted by a brick and mortar office in most cases so it is possible to choose the perfect legal setting, all connected with online reputation.
For instance, in US, Delaware is often considered since the law is well-developed. However, it might be a better idea to form an LLC in another state, exactly where the business operations are handled to save some extra complexities, like fees. Always carefully analyze advantages and disadvantages associated with where the LLC will be set up.
Choosing A Name For The LLC
Organizing the LLC without a business name is practically impossible. When choosing the LLC name there are some issues that have to be considered, including:
- LLC name needs to be unique and distinguishable from the active domestic and foreign LLCs.
- Names cannot contain some specific terms that are prohibited at a nation or state level. For instance, terms like “insurance company” or “bank” are usually not allowed.
- Trademark searches are needed so the name does not violate trademark owned by someone else.
- Names picked should not limit the business if growth is achieved.
- If the domain name associated with the online business is not acquired, seeing if it is free is a good idea.
The LLC Operating Agreement
An LLC operating agreement will set forth business owners, together with management, financial and other responsibilities and rights. This is highly complex and some key issues have to always be addressed in the document, like:
- How much capital is provided by LLC parties and whether or not contributions need to be made.
- How loses and profits will be divided among owners.
- Remedies or penalties that apply when capital contributions will not be made.
- Who manages the LLC.
- Manager indemnification protection.
- The way in which an officer is appointed.
- Voting rights.
- Procedures for dissolution and member meetings.
Online filing services and lawyers do have some standard LLC operating agreement forms that can be used. These are normally tailored for the individual situation of the new business. You want to be sure that you read these agreements to guarantee it is exactly as it should be for your new enterprise.