The Easiest Way to Form a Limited Liability Company

Written by Wesley Henderson

January 31, 2023

blocks with letters LLC

If you’re like most people, starting your own business and being your own boss is one of the many things you consider to escape the 9-to-5 rabbit hole.

However, starting a business is easier said than done. With countless paperwork, expensive capital, and legal requirements to consider, setting up a business can be overwhelming — not to mention the liability you hold once you start hiring employees.

For these reasons, creating a Limited Liability Company (LLC) has become popular among aspiring business owners.

An LLC offers both limited liability and flexible tax structures, making it easier to get your business up and running. Before you start conceptualizing your LLC, you must first learn the basics.

What Is a Limited Liability Company?

An LLC is a famous business structure that provides the owners with personal liability protection, as the name suggests. Limited liability companies are primarily composed of “members” who own, manage, and elect people to officiate the company’s structure.

The LLC structure is prevalent among many start-up owners because this structure combines the best characteristics of a corporation and sole proprietorship formats. With an LLC, you can build and structure your company however you like without the legal liability of a corporation.

Watch this short youtube to understand LLCs:

How Does an LLC Work?

Different states might have varying regulations on how an LLC works, but most follow the same basic rules and regulations.

For most states, LLC ownership is not restricted. This means that an owner can create an LLC body inside a company, or a foreign investor can create an LLC outside their state.

With an LLC, your personal properties, such as your home, car, and other assets, will not be on the line if your business faces legal or financial problems. This means you can retain most of your wealth, even if your company incurs a large debt.

When an LLC goes bankrupt, all properties under the LLC’s name are sold and paid to creditors. The creditors are legally prohibited from seizing any properties under your name.

What Do You Need To Start an LLC?

Starting an LLC is much easier than starting a corporation. Keep in mind that requirements might differ from each state, but here are some of the most critical paperwork you need to complete to start your LLC.

A Registered Agent

First up, you need to appoint a registered agent. The registered agent is responsible for keeping the LLC informed of legal developments, and they must be qualified to accept official documents such as summons, complaints, and other court processes on behalf of the LLC.

The requirement to become a registered agent is relatively lenient. You can be your own registered agent, or you can appoint another member of the LLC to serve as one as long as they are 18 years or older and live within your state of operation.

An Operating Agreement

An LLC operating agreement is a legal document outlining the terms and conditions of the company according to its members. This agreement should specify the company’s purpose, ownership, and management structure.

An operating agreement helps clarify where the LLC is heading, how each member should contribute to the company, and how members will solve disputes within the LLC. You can think of this as the decision-making guide of the company.

A Separate Bank Account

Since LLC is a separate entity from you, you must open a different bank account under the LLC’s name to prove the separation of assets during significant legal matters (i.e., bankruptcy or lawsuits). This also helps you keep track of the company’s financial performance more easily.

Accomplished Articles of Organization Form

The article of organization form is a state-level document you must submit to your local government. The form includes information such as the LLC’s name, purpose, street address, and primary contact details.

This document is similar to the article of incorporation, which is required when establishing a corporation. Both documents institute the company members’ rights, powers, limitations, duties, and obligations.

What Are the Benefits of Starting an LLC?

An LLC provides many legal and practical benefits for business owners. Some of the most significant benefits include the following:

Liability Protection

This is one of the most evident advantages of an LLC. Since the company is a separate entity from you and its members, your personal properties are legally protected in case of a lawsuit or bankruptcy. This clause protects you from significant financial losses, legal penalties, and other consequences.

Low Start-up Cost

As mentioned, starting an LLC requires less paperwork than building a corporation, meaning you could spend less on legal fees and other administrative costs. Furthermore, you can easily create an LLC without a physical office, saving you from spending more on overhead expenses.

This is best for individuals wanting to start a fully remote company and hire talents from different parts of the world.

Tax Advantages

Since the IRS doesn’t have a particular classification in taxing LLCs, you can choose how you want your company to be taxed (i.e., sole proprietorship, partnership, C-corporation, or S-corporation).

That said, LLCs are typically taxed as pass-through entities, meaning you can report the company’s profits and losses on your tax returns.

Management Flexibility

As mentioned, LLCs provide more leeway when it comes to management structure. Members can freely create a single-member LLC, which only caters to one owner or a limited partnership between two or more members.

Furthermore, you don’t need to hold regular meetings like corporations do since the operating agreement has already outlined the roles and responsibilities of each member.

How Can You Form an LLC the Easiest Way?

Although forming an LLC is much easier than establishing a corporation, it still consumes considerable time and effort. Fortunately, you can make the process much more manageable by utilizing an online LLC formation service like Drafted Legal.

With Drafted Legal’s “Start a Business LLC: Create, Set-Up & Register” service, you can have your business up and running within a week.

Our team will take care of everything you need, from an operating agreement template to getting assistance in setting up a business bank account and other tips and tricks to make forming an LLC much easier.

With just $197.00, you can get our full-service LLC formation plan for your business and be ready to leap into entrepreneurship.

Drafted Legal Makes Starting an LLC Easier and More Accessible

So what’s the easiest way to form a limited liability company? Drafted Legal!

Starting a business is a tedious process, no matter the size and structure, and doing it alone can be daunting, especially for first-time entrepreneurs. Fortunately, with the help of Drafted Legal, you don’t have to go through this process alone.

Our team of legal experts can assist in more ways than one to make sure your business is prepared for success, from filing taxes to creating a reliable online presence.

With our legal templates and filing services, you can be sure that your business is legally compliant and ready to face the competitive market.

Use our LLC filing services and kit today, and start being your own boss in less than a week!


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