5 Things To Know Before Forming An LLC

By  //  April 24, 2023

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Entrepreneurs can choose among several business structures with which to run a business. But the most common business structure globally is the limited liability company (LLC). The LLC is a hybrid legal entity combining the features of a partnership with those of a corporation. 

For instance, it transfers the tax burden to the members, which is a feature of a partnership. At the same time, it shields owners from the business’s liabilities, similar to that of a corporation.  

This article outlines the essential things you need to know before creating an LLC. They include the following:  

  • Designate A Registered Agent

You’re required to have a registered agent when forming an LLC in any state. The agent is an individual or a company that can receive official government documents or correspondence on your behalf. The selected registered agent must be a resident of the state where you’re forming your LLC. 

When entrepreneurs want to designate a registered agent, one of the main questions they ask is: “Can I be my own registered agent?” And the answer is a big YES. You’re allowed to name anyone as a registered agent of your LLC, including yourself. You can also designate an employee, a friend, or a third-party company. However, the agent must be at least 18 years old and always available during business operation hours.  

  1. Create A Unique Name For Your LLC 

Start marketing your LLC even before you launch it. This action will help create awareness of your products or services.  And when it comes to marketing, clients should be able to distinguish your brand name from other players in the industry. For this reason, creating a unique name for your LLC is essential.  

Note that states don’t allow two businesses to register with a similar name. You won’t be allowed to use a name already registered with another company in the state. And while you’ve got the latitude to create a name of your choice, you must meet the state law requirements. For instance, an LLC business name generally should end with either LLC, limited company, or limited liability company.  

One of the best ways to ensure you create a unique name for your LLC is to do a business name search. This way, you’ll see whether the name you want is available. You can do that online or visit the website of your state’s secretary of state. If the name is available, you can pay a reservation fee to ensure no other company can use it.  

  1. Create An Operating Agreement 

Creating an operating agreement isn’t a legal requirement when forming an LLC. But there are many good reasons to have it when starting and running an LLC. For instance, it informs every member of the LLC about their rights, duties, and responsibilities. An operating agreement is also necessary to protect your company’s limited liability statutes. 

You can create your operating agreement or hire experts. If you decide to do the work yourself, you can utilize the free online templates to guide you. And if you want to hire experts, ensure you find experienced individuals. 

  1. Prepare LLC Articles Of Organization 

Preparing articles of organization is an important step to starting your LLC. Articles of organization are a must-have document for creating an LLC in any state. Therefore, you must create one to launch your LLC properly.  

The major components of LLC articles of organization are:

  • The business name and physical business address 
  • The company’s purpose and how the business will be managed
  • The duration of the company
  • The contact information of your LLC registered agent

Once you prepare this document, it must be signed by the registered agent and the person forming the LLC.  

  • Open Business Bank Account

An LLC needs to have a bank account. It proves that the LLC is a separate financial entity. Besides, this arrangement makes tracking corporate expenses and income easier. Moreover, it can improve your brand image and helps shield you and other LLC members from liabilities in the event of a lawsuit. Here are the documents you need to open a business bank account:

  • Name and address of the LLC 
  • Company license
  • Employer Identification Number (EIN)
  • Identification documents of the people on the application
  • Articles of incorporation


One of the big decisions when starting a business is to choose a business structure. Currently, an LLC is the most common business structure. There are various reasons to run your business as an LLC. For instance, it offers limited liability to your assets. It’s also easy to form since it requires fewer legal formalities.  

When forming an LLC, you should ensure you do it correctly. And to achieve that, you’ll need to have the correct information. Finding a registered agent, creating a unique name, creating an operating agreement, preparing articles of organization, and opening a business bank account are some steps when forming an LLC.