Limited Liability Company (LLC) Formation Service

What is a limited liability company (LLC)?

A Limited liability company (LLC ) is a business entity that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.

The LLC allows for pass-through taxation, as its income is not taxed at the entity level; however, a tax return for the LLC must be completed if the LLC has more than one owner. Any LLC income or loss as shown on this return is passed through to the owner(s). The owners, also called members, must then report the income or loss on their personal tax returns and pay any necessary tax.

What paperwork is required to form a limited liability company?

Articles of Organization, sometimes also called a Certificate of Organization, must be prepared and filed with the state, and filing fees along with any applicable initial franchise taxes or other initial fees must be paid. If your LLC is formed through BizFilings, all you need to do is complete our simple order form. We will prepare and file your Articles of Organization and pay the initial filing fees on your behalf.

Who can form an LLC?

Typically, there are no residency or legal restrictions as to who can form an LLC. However, a few states impose requirements that members and/or managers must be at least 18 years of age, or the age of consent. For more information regarding the requirements of each state, view our state guides.

Do I need an attorney to form an LLC?

No, you can prepare and file the Articles of Organization yourself. Be sure you understand the requirements of your intended state of incorporation. You can use BizFilings' service to form your LLC and save money on attorney's fees. If you are unsure of what business type is best for you, review our Business Type Comparison Table and/or try our Incorporation Wizard. If you still have questions, consult an attorney or accountant.

What should I name my LLC?

Choose the name of your LLC carefully. It is very important that your name projects the image you want for your new company. Legally, the name you select must not be "deceptively similar" to any existing company in that state or must be "distinguishable on the record" of your state.

It is possible that the name you select will not be available—that’s why BizFilings asks for a second choice on the LLC order form. Additionally, most states require that the name you select shows your business is an LLC by including the words "Limited Liability Company" or the abbreviation of "LLC."

How many people are needed to form an LLC?

There is no requirement specifying the maximum number of members (owners) an LLC can have. The IRS does allow one-member LLCs to qualify for pass-through tax treatment. Taxation of the one-member LLCs at the state level may be different.

How is a limited liability company (LLC) taxed?

Typically LLCs are taxed like partnerships, with pass-through taxation. While multi-member LLCs must file an informational tax return, single member LLCs do not. In both cases, the profits or losses are “passed-through” the business and reported on the owners’ tax returns. Any tax due is then paid by the owners at the individual tax level.

LLCs can also elect to be taxed like corporations, where the profits of the LLC are taxed at the business level. The state income tax treatment of LLC profits and losses may or may not mirror the IRS tax treatment depending on the state. For more information on your state tax obligations, visit Business Owner's Toolkit.

LLCs are also subject to any franchise taxes imposed by the state of incorporation. A franchise tax is a tax imposed for the mere privilege of being an LLC incorporated or registered to transact business (foreign qualified) in that state. Franchise taxes are typically due annually, and the amounts differ by state. Note: California LLCs are subject to an annual minimum franchise tax of $800 per year. The first payment must be made within 3 months of forming your LLC. The state will send a bill to remind you to make this payment.

What is the organizational structure of an LLC?

An LLC is owned by its members. They are analogous to partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC utilizes managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in company decision-making. A member's ownership of an LLC is represented by membership interest, just as partners have interest in a partnership and shareholders have stock in a corporation.

How is an LLC managed?

An LLC may be managed by its members (owners) or by selected managers. If the LLC is to be managed by its members, it operates much like a partnership. Each member has an equal say in the company decision-making process. If the members choose, they may elect a manager or managers to act in a capacity similar to a corporation's board of directors. These managers are in charge of the affairs of the LLC.

Member-management is the normal default rule of state law. This means that if managers are not selected in the Articles of Organization, the members will direct the affairs of the LLC.

Should I choose a limited liability company (LLC) or an S corporation?

While the S corporation and LLC both have pass-through taxation, the S corporation lacks the flexibility of an LLC in allocating income to the owners. Additionally, an LLC may offer several classes of membership interest while an S corporation may only have one class of stock.

In terms of number of owners, any number of individuals or entities may own interests in an LLC. However, ownership interest in an S corporation is limited to no more than 100 shareholders. Also, S corporations cannot be owned by C corporations, other S corporations, many trusts, LLCs, partnerships or nonresident aliens. Finally, LLCs are allowed to have subsidiaries without restriction.

There are also differences in the handling of employment/self-employment taxes. Visit our article on LLCs versus S corporations for more information.

What is a publication requirement?

A few states require notice to be published in a newspaper that an LLC has been formed. States with this requirement for LLCs include: Arizona, Nebraska and New York. The Published Notice of Formation Service can be added to a BizFilings LLC Formation Service order in each of these states. For New York limited liability entities (LLC, LP, LLP), the New York Published Notice of Formation Service can also be purchased independently from BizFilings.

In New York, limited liability entities are required to publish notice of their formation or registration in two New York newspapers and to file proof of publication with the Department of State within 120 days. The publication is made at the county level in two newspapers. Failure to comply with the publication requirement by the deadline results in the suspension of a company's authority to do business in the State of New York.

How do I get started setting up a limited liability company (LLC)?

After you decide to form an LLC, Articles of Organization must be filed, and state and initial fees must be paid. After your Articles of Organization are filed, it is recommended that your LLC hold an organizational meeting of the members/managers where you adopt an operating agreement, issue membership interest certificates to members, and undertake other preliminary matters such as authorizing the opening of a bank account for the LLC.

What is Rush Filing Service?

BizFilings' Rush Filing Service allows you to decrease your LLC filing time frame to 24 to 48 hours in certain states.

Is Rush Filing Service available for every state?

No. BizFilings’ Rush Filing Service is available in the states listed in the chart below. The turnaround time listed adjacent to each state is the time it will take us to receive verification that your documents have been filed with the state, following the name approval or consent. The time frame excludes weekends and holidays.

How soon will I receive my documents when I select Rush Filing Service?

The 24- or 48-hour filing time is for the formation only. It typically takes longer for the states to produce the filed documents. Once BizFilings receives your documents from the state, we will ship them to you via FedEx Overnight delivery. This means you should have your documents in hand anywhere from just a few days to one week after filing. We will also scan them into our Online Status Center, making them available to you before you receive your original documents.

Note: some states require your signature on the incorporation documents when someone other than BizFilings is acting as registered agent. In these cases, the filing timeframe of 24 to 48 hours begins after we have received the signed documents and received any applicable prior approvals or consent.

Why should I include Rush Filing Service with my incorporation service?

Using BizFilings' Rush Filing Service secures your name and filed date in as little as 24 hours. This service is particularly valuable when you need proof of incorporation to secure a contract or to open a bank account.