- Ensure continued agreement among owners.
- Provide direction for the business.
- Ensure compliance with tax filings.
- Facilitate business and financial transactions.
Action Steps
The best contacts and resources to help you get it done
Develop an operating agreement
Although most laws don't require that LLCs have an operating agreement, your business will only benefit from having one. Among other things, an operating agreement usually details your accounting methods and internal management structure.I recommend: Create a customized operating agreement online, and then purchase a printed copy, at LegalDocs.
File the appropriate tax forms
Owners of LLCs must report profits and losses on their personal income taxes, as an LLC is not a separate, taxable entity. When it comes to taxes, LLCs are not considered separate from their owners and may therefore elect whether they want to be treated by the IRS as a corporation, a partnership or a sole proprietorship.I recommend: Download all the tax forms your LLC will need from About.com; then, find an experienced small business accountant to help you fill them out courtesy of the National Association of Small Business Accountants.
Maintain certified copies of your records
For certain business transactions, such as opening a business checking account or leasing office space, you may need to produce copies of your LLC formation papers. It's a good idea to keep certified copies of any amendments to your LLC as well.I recommend: Get certified copies of your records from the Company Corporation.
Schedule regular meetings
Although regularly scheduled meetings aren't required in many states, it's a good idea to hold them to ensure that all members of the LLC remain in agreement with the running of the business.I recommend: When your members meet, protect yourself by documenting the conversations and decisions; Nolo offers an eForm to help you take official minutes.
Make amendments
In the course of operating your business, you and the other members of your LLC may need to make changes to your articles of organization. For example, if you move your office or if any of the founding members leave the business, you'll need to make an amendment. Many states require that an Articles of Amendment form be filed when making any additions, deletions or changes to an LLC's articles of organization.I recommend: MyCorporation.com offers an Articles of Amendment form that can be filled out online.
File dissolution forms
Many states require LLCs to list a dissolution date in the articles of organization. An LLC may also be dissolved upon the death, withdrawal, resignation, expulsion or bankruptcy of one of its members. To close an LLC, Articles of Dissolution must be filed. These forms are sometimes referred to as a Certificate of Dissolution or a Certificate of Cancellation.I recommend: LegalZoom.com can prepare all the necessary paperwork and file your Articles of Dissolution with the appropriate state agency.
Tips & Tactics
Helpful advice for making the most of this Guide
- In a corporation, profits must be distributed evenly among shareholders on a dollar per share basis. LLCs, however, can distribute income in any way the owners choose.
- Most states allow business owners to form an LLC without the aid of an attorney; the paperwork for doing so is easy to understand and simple to fill out.
- Non-U.S. residents are allowed to be members of LLCs.
- An LLC can have an unlimited number of members.
- All members of an LLC, regardless of their number, are subject to self-employment tax.
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