3 Things You Should Know Before Starting An LLC

Among the major decisions when starting a company is to choose a business entity. For one, your chosen structure can determine your company’s tax obligations, management, and liabilities. And one of the preferred types of entity is a limited liability company (LLC).  

What Is An LLC?  

A limited liability company (LLC) is a business structure wherein the business exists as a separate entity from its members or owners. This separation means owners won’t be held liable for debts and other liabilities the business will incur, providing owners protection for their personal assets.  

LLC also offers tax flexibility, as business owners can benefit from pass-through taxation. In this setup, the losses or profits of the business are passed on to the members, who will then pay business taxes with their personal income tax, avoiding double taxation. Besides, an LLC is easier to form, run, and maintain than other structures, such as corporations.  

If you’re planning to form an LLC, here are essential things you should know to help you get started: 

  1. You Will Need An LLC Formation Service  

LLC formation and operation are governed by state law. However, every state has its own regulations surrounding LLCs, which can be complex. This is where working with formation service providers or registered agents comes in. 

Registered agents and formation services often understand these rules and regulations, which means they can best guide you to ensure a smooth process. They’ll also be responsible for receiving official documents and correspondence from the government. Besides, most states require one to have an LLC formation service provider or registered agent when starting an LLC. 

Although you can be your own LLC formation service provider, hiring a third-party expert has several benefits. For instance, forming an LLC can be time-consuming. If you do it yourself, you might not find time for other important tasks. Fortunately, an LLC formation service provider will do the work for you, allowing you time to address other matters to launch your business. 

Aside from that, an LLC formation service provides you with peace of mind. The best service to create LLC can help ensure all the documents are filled in correctly in the first place. Therefore, you can avoid mistakes that could ruin the entire process, which is important since your LLC formation application will only be accepted if you submit complete or properly filled documents. 

  1. You Will Have To Create A Unique Business Name  

When finding a business name, you’ll have to select something unique. Firstly, most states don’t allow two or more companies to share the same name. The reason for this is to help different businesses in the region and avoid confusion among consumers. 

Secondly, you need a unique name to help your brand stand out. Customers will associate your business name with the products or services you offer. It’s, therefore, important to have a unique name so clients can easily identify you.   

A name search is one of the best ways to ensure you create a unique name for your business. You can do it online or physically by visiting the office of the secretary of state or the government agency responsible for the company’s registration in your region. Once your proposed name is available, you can reserve it upon paying the required reservation fee, ensuring no one else can claim or use it.   

Moreover, when creating a business name, comply with the state’s company naming regulations. For instance, most states require the name of LLCs to end with either a limited liability company, limited company, or LLC. Most states also don’t allow using words like bank and insurance in LLC names. 

  1. You Should Create An Operating Agreement  

While it isn’t a legal requirement to have an operating agreement when forming an LLC, it’d be best to have one. It’s a document that guides your business’s internal affairs. It describes each member’s rights, duties, responsibilities, and how the company will be run. It, therefore, creates harmony in your daily business operations.   

Establishing an operating agreement can be overwhelming, especially if you’re doing it for the first time. You can use free templates online as a good start. But for convenience and efficiency, working with a corporate lawyer is recommended. They can guide you in drafting your LLC’s operating agreement with their expertise. They can also help in mediating negotiations to ensure every member agrees on what’s indicated in the document. 


Choosing LLC as your company’s business structure can benefit your business in many ways. It can protect your personal assets from the company’s debts and offer tax benefits. And to help you start an LLC, this post has outlined essential things you need to know. As a good start, work with a registered agent or formation service provider, select a unique business name, and create an operating agreement with a legal professional. 

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