What is a Limited Liability Company (LLC)?
A Limited Liability Company (LLC) is a newer type of a business entity. A Limited Liability Company (LLC) is a hybrid between a Sole Proprietorship or Partnership and a Corporation. It is for businesses who want to be taxed as a Sole Proprietorship or Partnership but want the liability protection of a Corporation.
What is a Domestic Limited Liability Company (LLC)?
A Limited Liability Company (LLC) which is organized within the state which the business is conducted.
What is a Foreign Limited Liability Company (LLC)?
A Limited Liability Company (LLC) which is organized within a state other than the state where its business is conducted.
What is a Member?
A member is a person who owns an interest in the Limited Liability Company (LLC) very similar to the way a Shareholder owns shares of stock in a Corporation.
What are Articles of Organization?
The Articles of Organization is the document that is filed with your state of formation to bring the Limited Liability Company (LLC) into existence. The information contained within the Articles of Organization can vary depending on the state of your formation.
What is an Operating Agreement?
An Operating Agreement is the document that states the rights and obligations of the members of the Limited Liability Company (LLC) in order to run the company. An operating agreement is not required as a prerequisite in forming the Limited Liability Company, but it is required to be kept at your place of business for maintaining compliance with the company’s corporate formalities. All members must sign the operating agreement in order for the operating agreement to be effective and valid.
In what state should I form my Limited Liability Company (LLC)?
Once you decide to form a Limited Liability Company (LLC), you need to choose a state to make your filing. Most people choose Delaware, Nevada, or their home state. Delaware is often chosen, especially by larger companies, because it has the most developed and flexible corporate statutes in the country and is considered pro-business. Nevada has also become popular because of its lack of state corporate income taxes, franchise taxes, and personal income taxes. It also has relatively low state and annual filing fees.
Nevertheless, if you have a small business and are going to be conducting a substantial amount of your business in your home state, it will likely be beneficial to form your LLC in your home state. If you form your LLC out-of-state, but conduct the majority of your business in your home state, you will have to make a filing to “qualify to do business” in your home state if there is a substantial ongoing business or physical presence in your home state. You will then be subject to the same fees, taxes and regulations as if you had organized your business there in the first place, and you will have paid filing fees (and, perhaps franchise taxes) to more than one state.
Can I Organize a Limited Liability Company (LLC) in more than one state?
No. A Limited Liability Company (LLC) can only be organized (formed) in one state. Once legally formed, it may do business in any state in the country, but it may have to fulfill additional requirements depending on what states the Limited Liability Company (LLC) wants to do business in. You should check with the Secretary of State and the state official that handles Limited Liability Companies (LLC’s) in any other states in which you want your LLC to do business within for additional requirements.
If a Corporation does business in more than one state, is it required to designate a registered in those states as well?
Yes. If your corporation is “qualified” to do business in other states, those states will generally require a registered agent in that state. For example, if your California Corporation has filed the necessary paperwork in Nevada to conduct business in the State of Nevada, the state of Nevada will require a Nevada registered agent. This may be an individual or another business entity that has a physical location in the state of Nevada.
What is a registered agent and iS-Corporation or LLC required to designate one?
A registered agent, sometimes referred to as a resident agent, (also known as an agent for service of process) is a person or company officially recognized by the state that resides within the state of incorporation and is designated by the corporation to accept service of process on behalf of the corporation. This may be an individual or another business entity that has a physical location in the state of incorporation. Please note that a Post Office Box or other “mail service” is usually not sufficient to qualify as a registered agent.
The registered agent is responsible for accepting official notices from the Secretary of State and service of process in the event the corporation is sued.
The Registered Agent MUST be available Monday - Friday 8am to 5pm at the location specified on your Articles in order to accept service of process. The registered agent's name and address are public information. If you wish to keep your company’s address information confidential, designating CorpNet™ to act as your registered agent affords you that extra added layer of privacy. CorpNet™ can serve as your company’s registered agent for service of process in any state for an annual fee of $149 per year.
What if a Limited Liability Company (LLC) does not designate a registered agent or does not renew its annual subscription with its registered agent for their services?
Any existing Limited Liability Company (LLC) is required by law to have a registered agent. If you do not pay the fee charged by your designated registered agent (or otherwise have a registered agent), your Limited Liability Company (LLC) may be considered defunct by the Secretary of State and lose its corporate status.
Do I need to send anything to the registered agent?
Yes. You should send the registered agent a copy of the Limited Liability Company (LLC) Operating Agreement, signed by the company’s secretary. These should be updated annually and/or whenever there is a change.
What is an Employer Identification Number (EIN)?
An Employer Identification Number (EIN) (also known as a Federal Tax Identification Number), is used to identify a business entity. Generally, a business is required to have an EIN specially if it has employees and/or the business is operated as a Corporation, Limited Liability Company or a partnership.
When is an Employer Identification Number (EIN) required?
An Employer Identification Number (EIN) is usually required when an applicant starts a new business , hires (or is about to hire) employees, is business operated as a corporation, LLC or a partnership, opens a bank account, changes their type of organization, or purchases another ongoing business.
Do you need an Employer Identification Number (EIN)?
Generally, a business is required to have an EIN specially if it has employees and/or the business is operated as a Corporation, Limited Liability Company or a partnership. CorpNet can assist your company in preparing and filing the necessary paperwork and obtain your company’s employer identification number for a minimal service fee.
What happens if a business entity does not obtain an EIN?
If a business entity does not obtain an EIN, it will not able to open up a bank account or file its business tax returns properly. As a business owner, you are required to identify your business with one of two numbers: either your Social Security Number or an Employer Identification Number (EIN). As a sole proprietor, you would identify your business with your Social Security Number; however, if you are operating your business aS-Corporation, LLC, or other legal entity, you must obtain an EIN for that entity.
What is my Limited Liability Companies (LLC’s) organization (formation) date?
Your Limited Liability Companies (LLC’s) organization date can be found on the Corporate Charter issued by the Secretary of State or will be “date stamped” on the front page of the Articles of Organization.
What is the Corporate/LLC charter?
A corporate charter is the document issued by the secretary of state’s office which indicates when the Limited Liability Company (LLC) came into existence; it is the birth certificate of a organization and usually contains the date the Limited Liability Company (LLC) and the identification number.
How does my Limited Liability Company (LLC) open a bank account?
Many banks provide their own forms that are required to open a corporate/LLC bank account. Most banks require a corporate resolution, which expressly authorizes the opening of an account, and specifying which individuals can sign checks and/or make withdrawals from the account. In addition an EIN (Employer Identification number) is typically required to open bank accounts.
Does the Secretary of State’s office issue a corporate seal for my Limited Liability Company (LLC)?
No. The Secretary of State does not issue corporate seals. Corporate seals may be obtained by the Limited Liability Company (LLC) directly from an office supply store, Stationery Company or a document filing service such as CorpNet™.
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