How to create an LLC online is a topic I have been considering because of recent tax law changes. If you are here, chances are you are searching the same information. Some companies like to make a lot of money by providing these services. There had to be a better way. I did some research and this is what I discovered. There is a low cost way to do this. I will show you how to create an LLC online. Let’s get into it.
How To Create An LLC Online And Budget Friendly
This is an LLC business structure, that I researched for starting in the U.S. It may be completely different in other countries. You will have to check your specific laws, they may be completely different. So, let me start with an introduction to an LLC.
A limited liability company(LLC) is a common start-up business structure that is becoming more popular due to recent tax changes. State and local laws govern the exact rules to setting up an LLC, but all LLC’s, protect business owners by providing limited liability protection. Tax laws provide for income of LLC’s, to be “passed through” to the owner. This means that the LLC owners are taxed, and there is no tax on the LLC. This eliminates any double tax.
One thing to note is that you do not normally need to hire a legal team to set up an LLC. Unless you have multiple owners or investors, for an individual in business you can do this yourself at a reasonable cost online. I am basically looking at the single owner, LLC.
There are several sites that can do this.If you search for how to form an LLC, choices like these come up.
How To Create An LLC In 5 Steps
The mere though of creating a sole proprietorship business entity conjures up almost instant emotional terror! However, before you stress yourself out, let me say, this is not as hard to do as people might think. It is a process, but it is rather short, and pretty straight forward. There are 5 steps to the process.
Here is the 5 basic steps needed. Each state is different, so the process will depend upon the rules in your state.
- Choose a name for your LLC – Some rules apply and differ in each state.
- File the formal paperwork (articles of organization) and pay the filing fee. The fee ranges from $100 to $800 depending upon the rules in your state.
- Create an Operating Agreement – The duties and responsibilities of LLC members
- Publish “notice of intent” to form your LLC – Not required in all states.
- Obtain any necessary permits and licenses to operate your business.
I am going to use LLC rules of Pennsylvania as this LLC example. I will remind everyone that different state rules will vary.
Ok, let’s break the steps down and get into the details. The first thing you need is rather obvious, what do you want to call your LLC. Give this some thought! If you are using your exact given name, you won’t need to declare a “fiticious name”. If not, it is still ok, you just have to make sure nobody else is using it.
1. Choose a Name for Your LLC
In Pennsylvania, the law requires you to choose a name for your LLC, that contains the words “Company”,”Limited” or “Limited liability Company” or an abbreviation of one of the three choices. No examples are provided, so it is possible that “Ltd.”, and ‘Co.” can also be used.
You have to have a different name that other businesses already on file with Pennsylvania. These can be found on the Pennsylvania Department of State business name database
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If the name you want to use is not available or is different than your own name, you will need to file a “fictitious business name statement “doing business as” DBA. and your LLC. It is possible somebody is using something very similar to your name, and you would do much better creating a unique brand!
You can also reserve a name. For a $70 filing fee, you can reserve your name for 120 days. You must file a Name Reservation(Form DSCB: 15-208)with the Pennsylvania Department of State.You can file online or by mail through your post office.
2. File a Certificate of Organization For Your LLC
This is the actual document that will create your LLC.
In order to create an LLC in Pennsylvania, you must file a Certificate of Organization Domestic Limited Liability Company(Form DSCB:15-8913)with the Pennsylvania Department of State.
The certificate must include the name and address of the LLC, and the name and address of your registered agent. (This is your legal representative for any legal matters that may arise)
Also the name and address of each organizer of the LLC. If you are going to have a manager, then you must report your manager’s name and address.
You must also report, if certain professional services are provided by your LLC.(this applies to certain restricted professional companies) These are: chiropractic, dentistry, law, medicine and surgery, optometry, osteopathic medicine and surgery, podiatric medicine and public accounting.
You must file a completed New Entity Docketing Statement( Form DSCB: 15-134A) along with your certificate.
This form must state who is going to be responsible for the initial tax reports, whether you file your own taxes or employ a tax preparer. It must have the names for the responsible party, it’s purpose, effective date(if any) the EIN(if any) and fiscal year end.
Both the certificate and the docketing statement may be filed online, or by mail through the post office.The fee is $125.
3. Designate a Registered Agent
Any LLC is required by Pennsylvania to designate a registered agent for service of process. It is labeled as a “registered office” in Pennsylvania. In most other states, it is referred to as a registered agent.
This is your legal department. They will handle any legal issues that arise, such as a lawsuit against the LLC. Any registered office can be an individual or a business entity that is authorized to do business in Pennsylvania.They must have a physical street address in Pennsylvania, to do business as a registered office. Here is a list of Pennsylvania commercial registered office providers.
4. Writing an Operating Agreement
Pennsylvania does not require an operating agreement. The operating agreement helps to authenticate your business so, one should be created. When two or more people are authorized, it makes sense to designate the duties of each and instructions covering anyone leaving the LLC. Even a sole proprietorship would benefit from having instructions for your heirs. It also adds credibility to your LLC, but does not have to be filed with your certificate of organization.
5. Publication Requirements
Pennsylvania does not require any public notification announcing the creation of your LLC
6. Pennsylvania Tax and Regulatory Requirements
EIN – If you are a one person sole proprietorship LLC, and you are not electing to be taxed as a corporation, or you have no employees, you do not need an IRS Employer Identification Number (EIN)
Business Licenses – In Pennsylvania, this can vary depending on location and the type of business, local and state business licenses may be required.
Department of Revenue – Generally if you are collecting sales tax, you will need to register with the Pennsylvania Department of Revenue(DOR) Additional LLC related taxes and DOR filings are possible. The Revenue e Services Center is also a helpful source of information and registering online.
7. Restricted Professional LLCs File Annual Registration
In Pennsylvania, LLC’s that are formed within certain restricted professional services must file a Certificate of Annual Registration (Form DSCB:15-8221/8998) with the Department of State. A Certificate of Annual Registration must be filed with the Corporation Bureau before April 15th every year. It can be filed online or by mail through the post office. The annual fee is $520 times the number of members of the LLC.
8. Foreign LLCs Doing Business in Pennsylvania
Anyone who organized an LLC outside of Pennsylvania, but does business in the state, must register with the Pennsylvania Department of State. All foreign LLC’s need to appoint a registered agent for service of process. To do this they must use a Foreign Registration Statement (Form DSCB: 15-41) The Foreign Registration Statement can be filed online or mailed through the post office. A completed New Entity Docketing Statement(Form DSCB:15-13A) must be filed with the registration statement.The filing fee is $250
The Pennsylvania business name database must be checked to ensure the foreign LLC’s name is available in Pennsylvania. To change a name and transact business registered under another name, it will require filing the Registration of Fictitious Name (Form DSCB:54-311) . This filing requires a $70 fee. The fictitious name must also be available for use in Pennsylvania.
This is the process you will need for obtaining your LLC. It does require some paperwork and various fees, but it is something you can accomplish without having to pay outrageous fees to accomplish. Compare prices and shop around before paying outrageous fees for doing this. If you are on a shoestring budget, you need to check out these Online DIY Legal Services!
* Cases involving a large number of members or investors should get a qualified legal service to set up your LLC.
DIY Legal Services Online
You can use any of the online services to accomplish this. I will list them again for your convenience here.
You are now ready to to create your own LLC.
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