The Doís And Donít Of Building A Limited Liability Company 

Learn what business owners need to know before they form their own company

by Lorraine Howard Tuesday, April 26, 2011
(Dover, DE)Ė Limited Liability Companies are fast becoming one of the most preferred business structures because of its varied tax and legal advantages. An LLC is similar to a partnership but its legal protection of personal assets is similar to that of a corporation minus the formalities, fees and paperwork. The laws and rules on building LLCs will very from state to state. For this reason, business owners starting an LLC must educate themselves with their own stateís laws before proceeding.

starting an LLC begins with filing the Articles of Organization. This document may be obtained from the Secretary of Stateís office. This form requires business owners to provide basic information about the LLC being formed including the name of the LLC, its members and their contact details. The filing fee ranges from $30 to $300, depending on the stateís imposed amount. Some states also have several registration requirements that need to be met before starting an LLC. To check for your own stateís own rules, restriction or fees, go to the Secretary of State Website or office.

Once you have completed the registration and documentation, it is important to draft an operating agreement. Though not required by law, an operating agreement is a legally binding document that defines the details of the business arrangements including membersí percentage ownership, the roles of the members, rights and responsibilities. An operation agreement helps protect the LLC structure. If challenged in court, it prevents owners from having to default state operating rules.

Business owners who wish on starting an LLC have three options for processing. They could hire a lawyer to do it for them, hire a company that offers LLC processing services or do the processing themselves. Whatever processing option you choose it is important to note that building an LLC will require a significant amount of paperwork. In addition, it is crucial to read over the documents and the operating agreement to make sure your interests are protected. In addition, make sure that you document all major business proceedings and law out some formal procedures, like annual meetings to protect your LLC status, though most states do not require any annual paperwork or administrative procedures.

There are certain rules and procedures to follow when starting an LLC. Below are some of the most common LLC processing doís and doníts.


Do learn the tax and personal liability consequences of your chosen business structure before you proceed.

Do create a business plan, as this will dictate the options you have once you made a choice which business structure to use.

Do comply with the state requirements, as this will speed up the processing period.

Do ask questions if you cannot understand any of the procedures.


Donít start the operation of your business without starting processing what business structure you want. Know that operating a sole proprietorship business with the intention of starting an LLC or a corporation will not protect your from being liable for any obligations or debts before the formation of an LL or corporation.

Donít think the business structure you chose can operate in other states as well. While a sole proprietorship and general partnership are allowed to operate in other states, other business structures are limited to operate in their home states, such as a corporation or an LLC.

Donít panic if you get confused with the LLC process. Choosing and processing business entities takes time, money and effort. To save yourself from trouble, you can always hire a company that specializes in processing business entities for companies like

The author is a researcher and contributor to, a site that assists business owners into processing the business structure they choose for their respective companies.

0    submitted by Lorraine Howard
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