How to form an LLC? Seven steps to build an LLC in the U.S.
Step 1: Choose which U.S. state you want to set up your LLC in, and then choose a name that is available
We will determine what location is best for your business based on the advantages and benefits of the laws as applied to your structure and your business plan. If you start an LLC, then the business name must have “LLC” in its title. The name must also not be already taken and cannot cause confusion with another business.
A confirmation of this is required before you can register with the Secretary of State where you want to establish your LLC. Each U.S. state's Secretary of State keeps a registrar of all the names of registered businesses. You can also use the U.S. Federal Government's Trademark Electronic Search System (TESS) to check business names, as well as registered products.
Naturally, many common names are already in commercial use. It is usually possible to structure and register your business using the name you want without risking trademark lawsuits that our firm can handle.
Step 2: File Articles of Organization for the LLC with the state
Forming an LLC often requires filing Articles of Organization with the Secretary of State where the LLC will operate, similarly to how a corporation must file Articles of Incorporation. Even if a state does not require formal Articles of Organization, they always require the same information through other means, so having Articles of Organization filed is still recommended. This is important to get an LLC approved for registration, protect intellectual property of the LLC through patent and trademark registrations, and licensing approval.
Step 3: Obtain an Employer Identification Number (EIN) from the IRS for the LLC
An EIN is a nine-digit unique number that serves as an identification for a business with the IRS (Internal Revenue Service). An LLC is required to have an EIN to
- open a bank account,
- file for permits and licenses,
- hire employees, and
- conduct other business activities.
By default, LLCs with more than one member are taxed as partnerships.
An LLC can choose to be taxed as an S corporation by filing Form 8832, “Entity Classification Election” with the IRS. Filing with the IRS is critical, and can carry penalties if filled out incorrectly, and may cause delays to registrations, licensing, permits and business growth.
Our team will ensure your forms and registration are done correctly to ensure compliance.
Step 4: Create an Operating Agreement for the LLC
An LLC's Operating Agreement defines the
- authority, and
- representative capacity
of the LLC for all members and managers. This document is important to preventing misunderstandings about who has the authority to make certain decisions such as legally binding the LLC to an agreement or contract with third parties, which by default is presumed to be any member or manager of the LLC that a third party can reasonably assume is an authorized agent of the company from their perspective.
This document ensures that daily functions are handled smoothly and correctly in the way you want your business to operate and grow according to your busines plan. The wording of an operating agreement can have significance in how your LLC is classified for legal and tax purposes by Germany, and other countries.
We will ensure your Operating Agreement is tailored to your specific needs to meet you busines plan and goals.
Step 5: Start a business bank account under the name of the LLC
An LLC must open a business bank account in its own name that is separate from the owner(s). It is commonly misunderstood that an individual owner must be able to open a personal account to be used by the LLC, or that they must have U.S. Social Security Number (SSN) or International Taxpayer Identification Number (ITIN) to open a bank account for their LLC.
An ITIN might be necessary for the individual owner(s), however an EIN (as explained above) is all that is required to open a business bank account for an LLC. Owners and managers that commingle personal funds with the LLC risk making themselves personally liable for debts and legal actions against the LLC, which defeats having the personal liability protection of an LLC structure.
Step 6: Obtain the required business licenses and permits, and visas
Depending on the nature of the business of the LLC, it may need federal or state licenses and permits, and to obtain immigration and work visas for owners and managers. This is typically true with any business activity that includes imports and exports, construction, advertising, manufacturing, transportation, and professional services (which may require formation of a PLLC).
Checking all local municipality, county, and state to see what requirements apply to them is critical. The structure of the LLC is important regarding the possibility for Germans or other non-U.S. citizen to obtain a visa. For example, the location and status of the LLC can impact the ability to obtain E visas, and L visas. We will structure your business to allow managers and members to obtain the required visas you will need.
Step 7: Ongoing legal requirements to keep the LLC compliant with applicable laws and regulations
An LLC must also pay attention to the ongoing compliance requirements to remain a legal entity in good standing with the state. Such obligations vary from one state to the next, but typically include
- filing taxes,
- having a registered agent service,
- renewing licenses and permits,
- filing annual reports with the Secretary of State,
- holding member meetings,
- taking meeting minutes (especially if the LLC chooses to be taxed as an S corporation), and
- updating the Secretary of State about significant changes in the business and potentially amending your legal documents (Articles of Organization, Operating Agreements, employment contracts).
WINHELLER is establishing your LLC in the U.S.
As a full-service business law firm with U.S., German and other European counsel, we will evaluate your business needs based on its activities, size, and complexity to establish the right foundation for your U.S. market entry. Our services include:
- Picking the right location for your LLC based on the local laws, and your goals
- Structing your LLC for your success and personal protection
- Plan the best tax strategy to maximize your benefits under local and international law
- Obtain the necessary licenses and permits to carry out all your LLC activities
- Apply for the visas your LLC will need to operate in the U.S.
- Ensure you have the necessary protection for your business's intellectual property and trade secrets
- Make sure you have the necessary internal documents to allow your LLC to operate and grow according to your goals
- Provide all the contracts and support services to allow your LLC to start working
Your attorney to form an LLC in the U.S.
You want to start or expand your U.S. business and form an LLC? You want your agreements and documents tailored to your specific needs to stay compliant? Our team of U.S. and German lawyers is ready to support you. We explain all requirements establishing a limited liability company and support you on all steps forming an LLC.
We can provide you with a consultation and ongoing legal services in German and English. Get in touch! The easiest way to reach us is by e-mail (firstname.lastname@example.org) or by phone (+49 69 76 75 77 80). Tell us more about your U.S. business and we will offer a service package tailored to your particular needs.
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