llc formation: How limited liability company formation works

An llc formation, by design, is pretty straight forward.

To set up an llc, you file articles of llc formation or articles of organization with the state government agency in charge of corporations and limited liability companies.

This document is sometimes a simple, one-page form. Typically, the document can also be a type-written list of descriptive bits about the new llc (the name of the llc, the person performing the llc formation, and so on).

Different states have different names for the offices or agencies that process the llc formation articles, but the agency or office is usually fairly easy to locate through a web search. (Note: I do provide links to the locations of free forms in the do-it-yourself limited liability company formation kits.)

Typically, the agency or office is connected with the state's secretary of state office and is named something like "Corporation Division" or "Corporations Division." If you want to locate the web pages that describe how to form a New York llc, for example, you could Google on phrases like "New York secretary of state," "New York Corporation Division," or "New York Corporations Division."

Note: If you purchase one of the do-it-yourself limited liability company kits listed along the left edge of this page, much of what I talk about is precisely what steps you take to fill in the forms.

Some states, including Washington state (where I live), let you file your articles of formation or articles of organization online.

Most states let you fax the llc formation document to the appropriate state office. You may have to pay an extra fee if you fax the llc formation document. You often can pay another extra fee to expedite or accelerate the processing of your llc formation paperwork. (Some states, for example, charge you large fees--such as $1000--to immediately process your llc formation paperwork.)

States may also have additional limited liability company setup requirements beyond simply filing the llc formation articles. Some states, such Arizona and New York require that public notice be given in a newspaper. States such as New York require an operating agreement for the limited liability company.

Which raises an important point: It's really an excellent idea to have an operating agreement written up to describe how the llcs owners, or members, relate to each other and to the llc. Attorneys even recommend that single-member llc's should have an operating agreement because the operating agreement, if honored, improves the liability protection.

After the state accepts your articles of llc formation and you complete any other state requirements--such as getting a business license for your new limited liability company (if that's necessary)--you're done with your llc formation.

Note: For general LLC information, click one of the links shown in the footer, such as the "llc formation steps" link.