NEW YORK – Business – When you are ready to incorporate your business, there are several options available. However, many businesses today opt for an LLC or limited liability company, because of the benefits it offers.
An LLC is essentially a hybrid entity that combines the flexibility offered by a partnership and the limited liability protection of corporations.
It is important to know what is an LLC operating agreement. Your new corporation’s LLC Operating Agreement are the legal documents that outline the ownership and member duties of your Limited Liability Company. The operating agreement sets out the financial and working relations among the business owners and between members and managers.
You can form an LLC by filing the articles of organization with the department or the secretary of state. What many people may not realize is that you don’t have to reside in the same state where the LLC formation takes place. Some other helpful LLC state information can be found here.
The Significance of Multi-State LLC Formation
You have the ability to form an LLC in any of the 50 states, as well as the District of Columbia. In each state, an LLC member receives limited liability protection from company obligations and debts.
The actual process of forming an LLC is extremely similar, regardless of where the LLC is formed. However, the actual feels to file the articles of organization will vary from one state to another. For example, in 2011, it cost $500 to file the articles of organization in the state of Illinois, but only costs $90 to file them in the state of Indiana.
Articles of Organization
When you form an LLC, the articles of organization are a critical part of the process. These include basic information, such as the name or the address of the business, as well as the purpose of the LLC.
The duration of the LLC’s existence needs to be included in the articles, as well as the name and the address of each of the organizers who are responsible for the article filing with the department or secretary of state.
Based on the state where the LLC is formed, the articles may have to indicate if the company is being managed by the members or if there are non-members who will be handling the managerial duties. Keep in mind, the method for filing articles of organization used will vary from one state to another.
The Role of the Registered Agent
Each LLC has to maintain a registered agent in the state of formation where the company is. The registered agent can be a business or person that accepts lawsuit documents that are served against the business.
The physical address and name of the LLC’s registered agent have to appear in the actual articles of organization. You have the option to hire a company to provide the registered agent services for the LLC if you don’t have a manager or member that can serve as the registered agent for the company.
The cost for hiring a registered agent is one that will vary from one company to another. Also, if your LLC has an actual, physical office in the state where it was formed, the company may be able to act as its own registered agent, but this is dependent on the rules of where the LLC state was formed.
If you are planning to conduct business in the state where you reside, it may be better to form your LLC in that state. However, you will have to register the LLC in every state where your company has any business transactions. It will also be necessary to file annual reports and even pay the fees that are imposed by any foreign state.
Being informed and knowing what to expect can help you better understand if and when you should form your LLC in multiple states. In some cases, this can be beneficial for your business.