DETAILED LLC (LIMITED LIABILITY COMPANY) INFORMATION
Set forth below is detailed information regarding the LLC incorporation process. Topics include choice of entity (whether to form a corporation, LLC or limited partnership), the State in which to form your LLC, selecting a registered agent, LLC business names, LLC company kits, LLC Operating Agreements, Member organizational minutes, Employer Identification Numbers (EIN), principal place of business for your LLC, LLC Members, LLC Managers, LLC officers, etc.
Selecting a Form of Entity for your New Company: Corporation, LLC (Limited Liability Company) or Limited Partnership (LP)
No single factor is determinative in choosing whether to start your new business by incorporating a corporation, an LLC or a limited partnership. If properly organized and maintained, all three types of business entities establish separate legal entities that can provide their owners with protection against personal liability for the debts and obligations of the new business. If properly formed and maintained, a corporation is taxed as a separate entity unless the corporation and its shareholders or stockholders elect Subchapter S Status for the new corporation. In general, LLCs and limited partnerships provide their owners with pass-through taxation treatment, and there is little, if any, taxation at the entity level.
A corporation is organized by filing Articles of Incorporation (or a Certificate of Incorporation) with the Secretary of State's office, adopting Bylaws, appointing directors and officers, and issuing stock to the Company's shareholders (or stockholders). The members of the Board of Directors of a corporation govern the Company's overall business affairs, but elect officers to manage the day-to-day business of the Company. An LLC is formed by filings Articles of Organization (or a Certificate of Formation) with the Secretary of State's office, adopting an LLC Operating Agreement (or LLC Agreement), appointing a manager (or managers) and issuing membership units to the LLC's members. The manager(s) of an LLC govern the Company's overall business affairs and can either manage the day-to-day business of the Company, or appoint officers to manage the day-to-day business of the LLC. A limited partnership is organized by filing a Certificate of Limited Partnership with the Secretary of State's office, entering into a Limited Partnership Agreement and issuing partnership units to its partners. Every limited partnership must have at least one general partner who manages the day-to-day business of the limited partnership. The other partners in a limited partnership are referred to as limited partners.
Selecting a State in which to Incorporate your LLC: California, Delaware, Florida, Nevada, New York or Texas LLC
The first step in forming every LLC is to file the Articles of Organization (or Certificate of Formation) with the Secretary of State's office in the State in which the organizers would like the new LLC to be incorporated. Determining which State in which to file often is governed by where the business is located, a desire to take advantage of lower (or no) taxes on income in certain States and a desire to establish the business under the laws of pro-business States. For example, the State of Delaware generally is considered to be a very pro-business state; whereas, the State of Nevada does not impose income taxes on business income.
Selecting a Registered Agent for your LLC
Every LLC (limited liability company) must appoint a registered agent in its Articles of Organization (or Certificate of Formation). The registered agent is the person upon whom any lawsuit or other legal proceeding against the LLC can properly be served, and to whom information from the Secretary of State's office and the taxing authorities will be sent. The registered agent must have an address in the State in which the LLC is being organized. The name and address of the registered agent will be public knowledge and easily retrievable by anyone through the Secretary of State's office. Although one of the organizer's of a new business may serve as its registered agent, many business owners elect to have an unrelated company act as the LLC's registered agent in order to avoid unnecessary disclosure of their names and addresses. A and A Companies serves as registered agent for its clients in California, Delaware, Florida, Nevada, New York and Texas.
Selecting a Business Name for your LLC
The name that you select for your new LLC cannot already be in use or be reserved by someone else, and it cannot be deceptively similar to another name in use or reserved for use. Name availability is determined by the Secretary of State's office of the State in which you are incorporating your LLC. The best way to ensure that your new LLC will have the name you want is to provide A and A Companies with a list of 3 names, in order of preference, and request that A and A Companies check for name availability before submitting the Articles of Organization (or Certificate of Formation). If you do not do this, and the name you have selected for your LLC is not available, your Articles of Organization (Certificate of Formation) could be rejected by the Secretary of State's office and the formation of your new business delayed several weeks.
Every LLC must include as part of its name, "LLC", "L.L.C." or "Limited Liability Company".
Ordering a Company Kit for your LLC
All LLCs must maintain books and records that contain, among other things, minutes of meetings and a log indicating ownership in the Company. Most LLCs maintain these and other records in a Minute Book. In addition, many LLCs issue certificates to evidence ownership in the Companies (Limited Liability Company Unit Certificates).
A and A Companies can provide you with a Company Kit that comes complete with a leather-bound, gold embossed Minute Book and official LLC Unit Certificates. In addition, included in the Company Kit is an official Company Seal for use on the Certificates as well as on other company documents.
Preparing Operating Agreement or LLC Agreement for your LLC
In order to complete the organization of an LLC, the Members (owners) of the LLC must adopt an Operating Agreement (or LLC Agreement). The Operating Agreement governs the business affairs of the LLC and sets forth the tax treatment for the LLC and its Members. A typical Operating Agreement addresses such matters as membership in the LLC, voting rights of Members, contributions to capital, management, allocation of income and loss, distributions to Members, restrictions on the transfer of Membership Units, indemnification of a Company's Managers, officers and certain other agents, termination of the LLC, and other general company matters.
A and A Companies prepares Operating Agreements for its customers. These Operating Agreements are tailored to the specific LLC based on information that you supply to us in your Limited Liability Company Application.
Preparing Organizational Minutes for your LLC
In order to complete the organization of a LLC, another document must also be prepared and adopted by the new LLC's Members. The Organizational Minutes will provide for the adoption of the LLC's Operating Agreement, election of the LLC's Manager(s) and officers (if any), issuance of Membership Units in the LLC to its owners, authorization to establish one or more bank accounts, as well as other general company matters.
A and A Companies prepares Organizational Minutes for its customers. These Organizational Minutes are tailored to the specific LLC, based on information that you supply to us in your LLC Application.
Preparing IRS Form SS-4 Employer Identification Number for your LLC
Every LLC that employs persons and pays wages must have its own Employer Identification Number (or Tax Identification Number). This number is analogous to an individual's social security number. This requirement exists even if you are the only employee of your new business.
A and A Companies prepares IRS Form SS-4 Employer Identification Number for its customers. This Form is tailored to the specific LLC based on information that you supply to us in your Limited Liability Company Application. It can take several weeks to receive an Employer Identification Number back from the Internal Revenue Service, but at A and A Companies we can tell you how to obtain that number immediately after your new LLC has been formed.
Principal Place of Business for LLC
Every LLC must have a principal place of business. The address for this principal place of business must be a physical location (not a post office box). An LLC's principal place of business can be a home address. A Company's principal place of business need not be located in the State in which it is organized. However, if that is the case, the Company must have a resident agent for service located in that State. A and A Companies can act as your new LLC's resident agent in California, Delaware, Florida, Nevada, New York and Texas.
LLC Units
In order to complete its organization, an LLC should issue Membership Units (much like a corporation issues stock). Membership Units represent ownership interests in the LLC. The LLC often issues Membership Unit Certificates to the owner of the Membership Units to evidence his or her ownership. An LLC can only issue Membership Units if it has received consideration for those Units. Typically, the founders of a Company contribute cash to the new business in exchange for their Membership Units.
LLC Members
An LLC's "Members" are its owners. Every LLC must have Members. An LLC's initial Members are the new LLC's founders. Typically, the initial Members contribute cash to the LLC in exchange for Membership Units in the LLC. The Members then enter into an Operating Agreement (or LLC Agreement) and appoint a Manager(s) to run the day-to-day business of the new LLC. At A and A Companies, we can prepare an Operating Agreement, tailored just for your new California LLC, Delaware LLC, Florida LLC, Nevada LLC, New York LLC and Texas LLC.
LLC Manager(s)
The day-to-day operations of an LLC are managed by the LLC's Manager(s). The LLC's Members appoint the LLC's Manager(s), who can be (but need not be) one or more of the LLC's Members. Typically, an LLC appoints its Manager(s) in its LLC Organizational Minutes. At A and A Companies, we can prepare LLC Organizational Minutes, tailored just for your new LLC.
LLC Officers
Management of most LLCs is handled entirely by the LLC's Manager(s). However, an LLC could, if it is desired, also have officers (analogous to corporate officers). Technically, these officers would be appointed by the LLC Manager(s) and would be subject to oversight by the Manager(s).
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