The 7 LLC Formation Documents You Need to Start an LLC

Napoleon

Feb 28, 2024 — 8 min read

Many companies both small startups and medium-sized enterprises in the US, are registering their business as LLCs because of the numerous benefits attached to owning one. While this is a great move that you should also consider, it should be noted that there are some vital documents you'll need.

This write-up will highlight and explain all the 7 documents you'll need to successfully register your business. You'll also get to understand what an LLC is, the advantages of owning one, and many more.

What is an LLC and LLC Formation Document?

An LLC popularly known as a Limited Liability Company is a business structure that allows members or shareholders to be treated separately from their business. As such the business is identified as a separate legal entity distinct from its owners. This type of company can therefore in its name sue other businesses and also be sued.

LLC can be owned by an individual, two or more. Once a business has been successfully registered as an LLC, the properties and assets of its owners are automatically protected in case the business incurs debts and liabilities in the future. A shareholder in a Limited Liability company can also be the manager or appoint a manager.

Overall, this business structure encourages flexibility in terms of ownership, management, and profit distribution and that's why many business enterprises within the US are registering as LLCs.

LLC Formation documents are the essential forms, documents that must be completed and filed with the secretary of state before an LLC can be formed. All of these documents are vital because without them your company registration cannot be completed. While most of these forms can easily be downloaded or completed online, a few require that you show up physically at the appropriate office. That being said, let's delve in to see the 7 important LLC formation documents.

7 LLC Formation Documents You Need to Start an LLC

Here are the 7 key documents you’ll need for your LLC formation

1. Internal Revenue Service form

Every business with an employee should have an Employer Identification Number (EIN). You can obtain your EIN online or through mail and you can do that by completing the IRS form-SS4. Apart from submitting your EIN during your company formation, you'll also need it when opening a business bank account, filing business taxes, and so on.

Application for the EIN is free within the US. To apply online for one, simply follow these steps.

Open your browser and search for the official IRS website. Once you're on the website, check out for Online EIN application.
Fill out the necessary information and submit the application.
When you're done with this, you will receive the EIN almost immediately or within 24hrs.
If you make your application through mail, it could take up to 4 weeks to receive it and if you apply by fax, you would receive it within 4 business days.

Application online takes 15-20 minutes to complete. You should however have all your information ready before starting. You would need to provide information like the location of your business, name of members, number of members or shareholders, and many more.

2. Article of Organization

Next is to have your Article of Organization or Certificate of Organization ready. You can get this document by applying through the secretary of state website. You'll be required to download a form and complete it. Usually, you are expected to file two copies of the form. One for the state and the other for your organization. Failure to meet up with these required copies could lead to rejection.

Although all states in the US have varying requirements, most articles of organization contain the following.

Business Name: You'll be required to provide your full official business name. Ensure that the name complies with the state naming ruling system and that it hasn't been selected by another business within your state.
Business Purpose: While some states require that you indicate the purpose of your business, others only require that you attest that your business will only engage in lawful business activities.
Duration of business: Many state allows you to select or indicate perpetual existence for the duration of your business. Others have specific limitations for the existence of an LLC while some few also allow you to indicate if there is any dissolution date for your LLC.
Registered Agent: These are usually business entities in charge of receiving legal documents from the state on your behalf. Your registered Agent should have a physical address in the state where your business is located and they should be readily available during business hours. You'll need to provide your registered Agent name and address when filing for your Article of organization.
Business Address: You'll also need to provide your business primary address, more like a business headquarters.
Ownership: All member's name and contact address will be provided. You might also need to specify the number and quantity of shares they own in the company.
Management structure: The management structure of the company needs to be clearly stated. Does the company have one, two, or more managers, are the members also the managers, or there be appointed managers? All of these questions should be answered.

3. Operating Agreement

An operating agreement is a document stating the rules, regulations, and obligations of a Limited company. It indicates how business will be run, how decisions will be made, and how profits and losses will be shared among the company's shareholder based on the number and values of their shares.

Although the Operating Agreement also known as the company Agreement isn't a mandatory requirement by the state, it is however an essential document that would guide the organization of the company, promote smooth running and help reduce conflicts. Overall the operating Agreement can be created by the members and must be signed by all shareholders to make it valid.

There are no rules to how this document can be designed but a typical company Agreement would contain the following:

Company's name and address
Registered Agent address
Shareholders name and contact address
Number and values of share of each member
How profits and losses will be distributed
Name of directors and contact address
Voting rights of members
How new members will be added
Succession plans.

4. Name Reservation Form

When forming your LLC, you'll be required to provide a name for your business. This name has to comply with the US naming policy. First, you would need to be sure that your selected name hasn't been used by another business. Moreover, the name mustn't be too similar or identical to other businesses.

You could check for the name availability through the secretary of state website. You might also want to check your specific state naming requirement regarding too similar and too identical names.

Apart from that, you would want to ensure that your business name doesn't contain any restricted words. Once you are set with the name, you can file a name reservation form with your state before completing your LLC Formation document.

5. Initial and Annual Reports

This document is required by some states during company formation and subsequently, some other states only require annual reports after the company's formation. The majority of the states fall under the latter while states like Washington, Alaska, and California use the former.

Annual Reports documents are required by all states because each state needs to stay updated about every limited company within. As such, each company is expected to provide records of business operations, the changes that have occurred within the company, and many more.

Some states require this report annually and biennially after the year of company formation while a state like Pennsylvania requires it every ten years.

Other names used by some states for the annual report include business entity report, annual certificate, statement of information, etc.

6. Tax Registrations

You would need to register your business with the Department of Revenue for tax. You may register for one or more types of tax including employer taxes, business entity tax, and so on.

Normally, tax registration forms are always included in the company's formation resources on the state's company website.

7. Business Licenses and Permits

While providing your formation documents, you might be required to submit your business Licenses and Permits depending on your state and the nature of your business. If your business is related to kids care, Food, or engineering, you might be required to provide your license. Usually, you can file for Licenses via your state corporation division.

It is essential to note that preparing the right document accurately can save a lot of time and effort. Having your formation application rejected because of a missed point or document could be devastating. As such, you should ensure that you provide the necessary documents and information.

Reasons You Should Form an LLC

Asset and Properties are protected: Forming an LLC helps establish your business as a separate entity. As such, your assets and properties are being protected. Even when your LLC incurs debts, your assets like cars, landed properties, and personal bank savings are protected from being tampered with.
Flexible to manage: As an LLC owner, you can decide who manages the business. You can appoint a manager or manage it yourself. Even when you have more shareholders, you all can decide who should be the manager. With that, it becomes easier to align the management of the company with the goals of the business.
Easy Formation: It is quite straightforward to form an LLC once you have all the required documents explained above. You do not have to go through any complicated paperwork. This makes it easy for individual entrepreneur or startups to create since they do not have to go through much stress before they can register their business.
Gives more Credibility: Forming an LLC tells the public that you are recognized by the Government. Having an LLC in your company name alone gives your company more Credibility because it enables customers, clients, lenders, suppliers, etc. to trust your business more.
Perpetual Existence: When an LLC has been formed, the death or retirement of any of its owners doesn't stop the business from continuing its operation. With that, the company attains stability and increases its chances of achieving its long-term goals.
Access to Grants and Incentives: As a Limited company, you may be eligible for one or more grants within your state. This could be in the form of a tax break and other financial resources provided to small businesses.

How Much Does it Cost to File Your LLC Documents?

When you have all the required formation documents ready, the next thing to do will be to file them and submit them for approval. The cost of your LLC formation depends greatly on the state where you are located within the US.

While you could pay as little as 50 USD in some states, you might be required to pay up to 400 USD in others. This cost doesn’t include other payments you’ll make like when making reservations for a business name or when you wish to fast-track the process.

Generally, you would want to find out how much it costs in your state as each state's formation fees differ.

Frequently Asked Questions

Is it possible to form an LLC for free?

No, it is not possible to form an LLC for free. While it is quite cheap to form a Limited Liability Company in some states in the US, it could be more expensive in others. A state like Kentucky charges $40, New York charges $200 and Texas charges $300.

Do I need a physical business address for my LLC?

No, you necessarily do not need a physical business address. However, you must have a physical address for your registered Agent.

Can my LLC have an unlimited life?

Many states in the US now allow the perpetual existence option. So while filing your documents for formation, you can indicate you want an unlimited life for the business.

Must I submit all documents before my LLC can be formed?

Yes, you must have all the necessary documents before filing for the formation. Moreover, incomplete documents could lead to an application rejection.

Conclusion

Filing the appropriate documents and providing the correct information can help you ease your LLC Formation process. Be sure to carefully check through all the details before submitting your application. Do have a question about how to file the appropriate document? Kindly contact one Foundeck on the best way to go about it.