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There are some basics you need to know about starting an LLC before you begin.

Understand What an LLC Is

LLC stands for “limited liability company” and the owners of one are called members. There can be as many members as you like, and the advantage of limited liability is that the members are not held legally liable if the company faces any financial trouble. In other words, creditors cannot go after their personal money to cover the debts of the company.

Benefits of LLCs

Other benefits in addition to the limited liability include:

Pass-Through Taxation - With pass-through taxation, the profits the members earn are taxed as individual income, which means they avoid the double taxation that occurs in a regular corporation where net profits are taxed first, then each owner has to pay individual taxes on any income.

Other Benefits - Members have to deal with less paperwork to start up the business, less paperwork to maintain it, and less regulations overall.

The Necessities for Starting an LLC

Here are the steps to putting the process in motion:

1. Choose a name for your business and confirm that it doesn’t already belong to any other limited liability company.

2. Complete the necessary paperwork, which includes:

Articles of Organization – A document needs to be filed with the Secretary of State’s office in the appropriate state. Most fees range from $100 to $800 and depend on the state.

Notice of Intent to Form an LLC – Some states require you to publish your intent as a notice in a local newspaper.

Operating Agreement - It is a good idea to create an operating agreement, especially if you have several members, but it isn’t legally necessary.

Licenses and Permits - Get the necessary permits and licenses to do business in your state, including your federal tax ID number.

3. Use SettingUpLLC.com to complete the first two steps so you can focus on the job of running your business.