If you are a US citizen you can either start an S-Corporation or an LLC while if you belong to a foreign country, you can form a C-Corporation or an LLC. So, whether you are a US citizen or from outside, you can start an LLC in the US.
Many LLC services can help you in forming an LLC. However, to select the best online LLC formation services, you need to have basic information about the LLC, steps to start an LLC, the best LLC filing service operating in the country, and the important factors to look for when selecting the most suitable among the available online LLC filing companies.
In this article, we will provide you with detailed information on all the above aspects of forming an LLC. Let us begin with some basics.
What is an LLC?
LLC which is short for Limited Liability Company is a business entity in which the owners of the company are not personally liable for the company’s liability but they can enjoy the benefits of flow-through taxation of the company.
As per US law, you can form an LLC in the capacity of an individual as well as a company.
Unique Features of an LLC
The following are some of the unique features of an LLC:
- Company liability is not the personal liability of the owner.
- It is quite easy to form an LLC like a sole proprietorship or a partnership firm.
- It is costlier to start an LLC compared to a partnership.
- An LLC is simple to operate as it requires to fulfill fewer formalities.
- Owners get follow-through taxation benefits.
- Unlike corporations, LLCs are not subjected to double taxation.
- LLC does not have shareholders as in the case of a corporation. The owners of the LLC are called Members.
- LLC has no restrictions on the number of members and the inclusion of foreign members.
- An LLC has to be dissolved in case of the death of a member and also in case of bankruptcy.
- It is governed by the rules set in the Operating Agreement.
- LLC is not a preferred business entity if you want to build a public-traded company.
9 Simple-to-follow Steps to Form an LLC
Though each state has its own rules and system to form an LLC, there are some steps commonly followed by all the states.
#1: Choosing the State
The selection of a state to form an LLC depends majorly on the present location of the members forming the company. It also depends on the nature, type, and segment of the business, prospective clients, availability of raw material, and commercial aspects like cost of running and logistics expenses, etc. Subsidies offered in a particular region, on certain businesses can also be a determining factor in selecting the state.
#2 Selecting the Name for Your LLC
State corporate divisions set the rules to select the name of an LLC. You can shortlist a few names of your choice following these rules and check for the availability of the names through the search portal of the respective state LLC office. Alternatively, you can also check the availability of names at the registration office of the relevant state. The following are some of the rules you must ensure to follow while shortlisting the names:
- The name shouldn’t be already registered with the state.
- Some states do not allow the same name even for different types of business entities.
- Some states do not permit the same name in different cities of the state.
- The name should end with the suffix “LLC” to clearly indicate that it is a Limited Liability Company.
- There should be no resemblance of the company’s name with the name of any government agency. For instance, you cannot use names like US Government, FDA, and US Police, etc. Besides, you cannot use any name prohibited by the federal or state government.
- Some states require you to seek special permission to use the following names in your business name:
bank; banker; banking; banc; banco; Banque; credit union; deposit; savings association; building association; savings and loan association; building and loan association; savings bank; thrift; trust; or trust company.
- There is a provision of pre-booking the name of your business. You can avail of this facility by paying a small fee.
#3 Registering the Business
To give legal status to your LLC, you need to register it with local, state, or/and federal agencies depending on the state of formation and the structure of the business.
- Registration with the Federal Government is necessary if you want to obtain trademark protection.
- You can file for the registration after the formation of your LLC with the United States Patent and Trademark Office.
- You are required to register your LLC with the relevant State Government where your business has a physical presence. This includes the states which,
- You frequently visit for business-related meetings,
- Your business earns significant income and
- Any of your employees are performing business-related activities.
- Depending on the procedure followed in the state, you can,
- File for LLC online,
- Personally submit the required documents in the registration office or,
- Submit required papers through e-mail.
- You can directly file your documents or hire an agency to do it for you.
- If your business activities involve more than one state, you will have to file for your business in all the states,
- Register your LLC in the formation state as a domestic business.
- Register it as a foreign business in the other states for foreign qualification.
- Filing for foreign qualification will require a ‘Certificate of Authority’ with the other states.
- Some states may also request a ‘Certificate of Goods Standing’ from the formation state.
- You will be required to pay applicable taxes and annual report fees in all the states.
- Though it is not mandatory to register your business with your city or the county in all cases, you may need to file papers with them to obtain relevant licenses and permits to run the business in the region.
- It is mandatory to appoint the registered agent who has the physical address in the state where you are registering your LLC.
- You can yourself perform the role of the registered agent or can hire a service provider for the purpose.
- The registered agent is available in the state of LLC registration during normal working hours.
- They have the authority to receive and sign the official and legal documents on the company’s behalf.
- The address of the registered agent should be different from the official address of your company.
- You need to submit the following documents while filing your LLC.
- Articles of Organization that mandatorily should include the following information,
- Name of the company
- Location of the company
- Name of all the Members
- Relevant information of Registered Agent
- Along with documents, you need to deposit the applicable registration fees as per the fee structure of the state and the type of your business.
- Though it is not mandatory to prepare an Operating Agreement in all the states, it is recommended to prepare it to protect you and your business. The Operating Agreement includes,
- Details of the financial structure of the company,
- SOPs to make key decisions related to operating the business, and
- Roles, responsibilities, and authorities of each member.
- It is advisable to keep all the Initial Reports ready after the registration. The state registration office can demand these reports within 3 months of the date of registration.
- Articles of Organization that mandatorily should include the following information,
#4 Obtaining Tax ID Numbers
To pay different federal and state taxes, you will need to obtain a Federal and State Tax ID Number. Tax ID Numbers also serve as a Personal Social Security Number and help in serving many other business requirements.
- Federal Tax ID Number is also called Employer Identification Number (EIN).
- It is used in paying federal taxes, recruiting employees, getting different permits & licenses, and opening bank accounts.
- You can apply to obtain EIN as soon as you get the registration of your LLC.
- EIN is issued without charging any additional fee.
- You need to obtain a State Tax ID number if your LLC needs to pay state taxes.
- Check with the state office if you require a State Tax ID number. Some of the states in the US do not levy any income tax while a few impose tax only on earnings through dividends.
- The state ID number also acts as a Social Security Number (SSN). The SSN can safeguard you from identity theft.
#5 Applying for Relevant Licenses and Permits
You need to obtain relevant licenses and permits from federal and state agencies to operate your LLC legitimately.
- If your business is regulated by the federal agency you will be required to obtain licenses and permits from the federal agency by fulfilling relevant requirements and paying applicable fees.
- Depending on the type and location of your business, you may need to obtain relevant licenses and permits from the state and local agencies like the city and county of your company.
#6 Providing US Office Address
It is important to have a US physical address to open the US bank account and to receive company-related mails at the US address. You can arrange an office of your own or can hire these services through an LLC agency.
#7 Designing Business Website
Getting a domain name is quite easy in the US. So, design the website of your LLC along with your business logo for effective marketing of your business. The official website will also help open the merchant account.
#8 Getting US Phone Number
You have a few options to choose from while selecting the phone number. Either choose a local phone number with the area code or select a toll-free number or hire a service agency and provide their phone number for the purpose.
#9 Opening Business Bank Account
There are three different types of accounts you may be required to open viz. US bank account, a bank account in the home country, and a US merchant account. It is necessary to open up these accounts to comply with the legal requirements. Besides, the bank account also safeguards you during any unfavorable business situation.
- It is mandatory to have a US bank account to open an LLC in the country.
- The US bank account also allows you to receive payments in the US.
- Enforcement of anti-terrorism laws has made it difficult to open a US bank account. So, expect a delay in the activity and also be prepared to fulfill more formalities when opening the account.
- Search for the bank that can open the account in the least time requiring minimum paperwork.
- You may also need to open a bank account in your home country, as well. For this, you will need to be in touch with the consultant to know the documents required to open up the home country account.
- Check if your country is a member of the Hague Convention.
- If yes, Apostille authenticates the LLC company formation which will be required to open the account in your country of origin.
- If not, you will require the Certificate of Authentication which is evidence of forming an LLC in the US. To avoid delay in opening the account, you can apply for the certificate soon after the formation of your LLC and before initiating the account opening process in your home country.
- Having a US merchant account facilitates you to accept credit cards and e-checks.
- Keep handy the details of your US bank account, business address, and US phone number to open a US merchant account.
- Check if your country is a member of the Hague Convention.
Top 7 Best Rated Online LLC Formation Services
Having understood the steps to follow in forming an LLC, you might have realized that there are many legal and other requirements to fulfill with different offices at the local, state, and federal levels. Taking the help of a professional in the field can help you in the easy and faster formation of your business.
Now, the next big question is whether any professional agencies offer their services in starting an LLC? And if yes, how to find out the best company to form LLC?
Well yes, there are many LLC services that can help you in finding out the best company to file LLC and starting your business in any state in the US. Taking assistance of these services saves a lot of time for you and also the expensive fees of the attorneys. Some of these service providers offer their services for the formation of LLC only while many others offer support even in operating the company. In this article, we are reviewing the top 7 best LLC formation services in the country to help you select the most suitable one for your business.
- Nevada Corporate Headquarters (entity.nchinc.com)
IncFile is one of the most popular business formation services in the US. Offering one of the most affordable and cheap LLC formation services, IncFile is unique in providing free cost of registration to its clients.
- The company offers three different packages to offer viz. Silver, Gold, and Platinum. Different packages offer different services related to LLC formation like preparing the articles of organization, name searching, free registered agent services, EIN, opening a bank account, shipping, expedited services, and customer support among many.
- Apart from offering low-cost LLC formation services, IncFile also has a very simple-to-use website replete with highly valuable information on starting and operating the business. It also allows you to track the status of your application online.
- The company takes 15 official days for the registration of the business for standard filing. However, for the expedited services the company gets the registration done in two working days at an additional service charge.
- Besides offering the standard legal assistance to form an LLC, IncFile also provides legal support to run the company. They also offer their support in filing IRS and tax returns for your business.
- Free of cost registration
- Highly organized and informative website
- Ideal for small LLCs
- Easy-to-use user interface
- Online status tracking through the dashboard
- Impressive customer support
- Educational material is available only after the formation of the LLC
- Refund policy is not quite lenient
Quick turn-around time is one of the most highlighting features of BetterLegal.com. It is also known for its high-level customer services. Keeping in mind the client’s convenience, BetterLegal does not upsell or pop-ups ads for products irrelevant to the customers.
- The quick filing of forms in 5-10 minutes by most of the customers makes them one of the easiest to register LLC services.
- BetterLegal has a single pricing package that includes services related to preparing and filing articles of organization, operating agreement, federal tax ID number, EIN, opening bank accounts, and so on.
- Some of the unique features of BetterLegal include a free website or online store and a free online checking account that requires no minimum deposit or monthly balance and zero overdraft fees. BetterLegal also offers free tax analysis to its clients.
- It has a unique Info Center which provides its clients highly informative articles published by renowned legal experts. Besides, it also has an ‘ask a question” feature to help clients get answers to any of their queries related to LLC formation. It also provides a facility for searching names for your business.
- BetterLegal does not offer registered agents. They can, however, connect you with a professional agent at highly discounted rates.
- Fast turn-around time
- No upselling or irrelevant ads to avoid customer’s inconvenience
- Flat service charge
- Free website, free checking account, and free tax analysis services
- Highly useful Info Center
- Don’t offer registered agent services
- Does not guarantee any refund
- No apparent contact info and About Us page
Since its inception in 1989, IncAuthority has helped over 130,000 business entities to form businesses. They are one of the very few LLC services that do not charge any service fees to form an LLC. Besides, they also offer one year of free registered agent service.
- IncAuthority has four different service packages including the Free Formation Package that allows for name searching, helps in preparing required documents, and free registered agent services among many other useful features. The other three paid packages viz. Starter, Executive, and Tycoon come with many more features.
- Apart from the free formation plan, IncAuthority has an excellent reputation among the customers. It offers almost all the business services related to LLC viz. Tax Planning, Business Credit and Funding and so on.
- The ever-changing laws and many old-time rules and regular amendments make it very difficult for an inexperienced services provider to provide adequate guidance. IncAuthority with experience of over 30 years is, therefore, the ideal choice for those who are particular about following all the right procedures and who want a completely hassle-free formation process.
- With their long experience and ample resources, IncAuthority offers its services in 50 US states with normal as well as expedited filing services.
- Apart from support through phone-call and email, IncAuthority provides one-on-one guidance through their dedicated team of experts.
- Offer free LLC formation services
- Easy LLC creation online
- Free registered agent service for one year even with the free formation package
- Long experience
- Excellent team of professionals
- Very positive customer feedback and reviews
- Premium packages are more expensive than many other service providers
- Does not offer any refund
MyCompanyWorks is one of the biggest service providers for LLC and other business services in the country for those who are interested in forming an LLC online. The company through a unique webinar offers a free Business Tax Consultation covering information related to IRS filing, taxation, and others.
- The company offers 3 pricing plans to its customers- the Basic, the Entrepreneur, and Complete LLC Packages. Different packages have different features with the Complete Package including the free registered agent services for a year. This feature is also available as an add-on feature with the other two packages, at an additional charge.
- Unlimited name searching is another key feature offered by the company. Besides, compliance and spelling audit, online viewing of documents, and lifetime account access are some of the other unique features of MyCompanyWorks. Each package comes with a highly useful 22-page LLC Handbook.
- The company offers same-day processing of your application for all the packages.
- The company uses multiple channels of customer support services including support through phone calls and e-mail support. It has a solid customer satisfaction policy. It either resolves the issues related to customer satisfaction or refund the full fees taken for the services excluding the fees levied by the Government or any third-party vendor.
- One of the largest service providers in the country
- Free Business Tax Consultation through the webinar
- Unlimited name searching facility
- Same-day processing
- 100% customer satisfaction guarantee
- Some customers experienced a delay in receiving paperwork
Firstbase.io has a solid base of thousands of clients spanning 120 countries internationally. It is a fully remote company with its employees managing services from the US, Mexico, Brazil, Bulgaria, Belarus, Ukraine, and the Philippines.
- io charges a flat one-time fee to offer all filing services. Besides, they offer services like opening a US bank account and free consultation to its clients. It also gives start-up rewards of up to $20K.
- The company is a one-in-all service provider, unlike many other LLC filing services that are dedicated to providing only the specific services in forming LLC.
- The online module is extremely user-friendly and takes a few minutes to complete the form. Firstbase.io takes only a few days to register LLC in the state of the US.
- The company resources include blogs written about different business entities and a comprehensive Founder’s Guide providing all the detailed information about setting up any type of business in any state of the country.
- For best customer support you can contact them through email or by filling an online providing relevant information including with your message.
- To support their customers spread across different countries, Firstbase.io offers professional support in 5 different languages viz. English, Spanish, Portuguese, Russian, and French.
- Spread across 120 countries
- Flat-fee to provide multiple services
- Extremely user-friendly website
- Highly informational Founder’s Guide
- Remotely operated
- Support in 5 different languages
- The single fee package makes it a bit expensive for those who want only the basic services
ZenBusiness, as the name suggests, has a zen-like composure. This composure has helped them to become one of the most customer-friendly service providers in the country. Besides, the quality of being calm and at ease with the situations have also helped it to get recognition as a company that can deal with the most complex situations with ease.
- The ZenBusiness Services provides a worry-free guarantee to its clients. In this offer, they provide amendments in two annual corporate reports without any additional charge.
- The company offers three different pricing packages viz. Starter Plan, Pro Plan, and Premium Plan. All these packages contain multiple services like business filing services, preparing the articles of organization, providing registered agent services, EIN, worry-free guarantee, expedited services, domain name, business e-mail, rush services, and effective customer support, etc.
- ZenBusiness has developed a very user-friendly website without diluting the functionality aspect of the application. The website provides highly informative material on all aspects related to forming and running LLC in different states.
- The company offers different filing time for registration for each of their plans. For the Starter Plan, the time taken is 2-3 weeks, for the Pro Plan the company asks for 5-8 business days and 2-4 days is the time required to form an LLC for those who have opted for the Premium Plan.
- From the legal assistance aspect, ZenBusiness provides all the essential legal services required in forming an LLC. Besides, it can also help you in publishing the new business in New York publication.
- The company offers customer support through multiple channels like phone calls, chats, and e-mails.
- Perfect for the businesses that undergo frequent changes in their leadership
- Worry-free guarantee
- Affordable pricing plans
- A systematic and simple-to-use interface
- Online chat assistance and support during weekends
- Highly knowledge-based articles on the webpage
- Limited Legal services
- Services are not very quick
With an experience of over 30 years and support in the formation of more than 150K business entities, the Nevada Corporate Headquarters (NCH) is one of the most sought-after LLC services in the US. If not the best LLC formation company, it is one of the best among the top LLC filing companies.
- NCH offers excellent one-on-one personalized guidance and support to all their clients in setting up an LLC, safeguarding their assets, and minimizing taxation.
- The company enjoys tremendous support from their clients and are one of the most reputed LLC services providers in the country.
- Their excellence in quality of services is far above the rest. They do not get satisfaction until they provide the best services to their clients. Even after getting positive feedback from their customers, they recheck their services through their internal and highly stringent quality standards. They use their internal quality checks to consistently improve their services to raise their standards to the level that their customers are not only satisfied with their services but feel delighted after receiving them.
- Experience of more than 30 years and 150K business entities formation
- Outstanding customer satisfaction level
- Very positive customer reviews
- Highly informative website
- Personalized guidance and support
- Navigation within the website is a little tricky
How to Select the Best LLC Service?
Many factors may affect your decision of choosing the right LLC service for your business. Some clients may require support only in the formation of an LLC while others may want assistance in operating the business, as well. Let us find out which are the major factors that must be considered when selecting the best service for your business.
Most LLC service providers offer multiple pricing plans with each plan having different charges and different sets of features to offer. You need to closely look at your requirements and select the services that can fulfill your specific needs. Choose the most suitable plan of the selected company while giving due consideration to your budgetary and business requirements.
Depending on the type and location of the LLC, it may take a fortnight to a month to file an LLC. Many companies offer rush filing services. You can get expedited services from these companies by paying some additional charges. Some of these service providers have the USP of fast service and can get the filing done within a single day. You can select the services as per your urgency level.
Software and Knowledge Resources
To ease out the filing process, most LLC services provide simple-to-use features on their software. These applications also offer numerous articles to make you aware of the requirement of filing an LLC in different states in the US.
Different companies offer different types and levels of legal support to their clients. Some service providers offer only the most essential assistance to form an LLC while others provide comprehensive legal assistance in forming and operating the company.
Last but not the least, this factor can be critical for many clients. Most professional service providers offer multiple channels like chat, e-mails, and phone calls to provide support to their customers. Some companies even provide dedicated support to their customers. Providing services during even the weekends is also one of the ways to delight your customers with excellent services.
LLC is the most popular business entity in the US. It offers the benefits of both- a proprietary or partnership and a corporation. As a partnership firm, it is pretty easy to form an LLC, and similar to this business entity, owners of an LLC also get the benefits of follow-through taxation. It is similar to a corporation as the owners in this business entity too are not personally liable for the liability of the company. LLC is the type of business entity that can be formed by both US citizens and non-citizens.
Though starting an LLC offers many advantages over other types of business forms, it is also important to follow a systematic approach in forming and running the company. It will not only help you in getting quicker and seamless registration of the firm but will also keep you and your business protected from the adverse impacts during any unfavorable business situation.
In this article, we shared with you 9 simple steps to start an LLC. Besides, we also reviewed the top 7 best LLC services to help you select the best among them that suit your specific requirements. Moreover, we also discussed the factors you should consider when selecting the best LLC services for your business.
We hope that this information was helpful to you in enhancing your knowledge about LLC and also in selecting the best LLC services that you want to hire for your business.
Frequently Asked Questions
Q: How does a Limited Liability Company safeguards business assets?
A: LLC provides limited liability to its owners. It means that the company owners do not own the assets of the company. Similarly, the company too does not own the personal assets of the owners. So, any legal case against the company will keep the owners of the company insulated from any prosecution. So, their liability will only be limited to what they have invested in the company.
Q: Is a “Limited Liability Company” different from a “Limited Liability Corporation”?
A: People sometimes consider LLC as the short for ‘Limited Liability Corporation’. However, there is no such business entity that exists with this name. The two resembling business entities are “Limited Liability Company” which is the full form of LLC and another one is called the Corporation or Incorporation.
Q: Do the LLC members receive the salaries?
A: No. LLC members receive the share of the profits made by the company proportionate to their ownership percentage. They can choose to receive the profit during the year-end or can opt for the year-round receipt of their share of profits. No fixed or variable salaries are given to any of the LLC members.
Q: Do LLC services also provide post-formation LLC support?
A: Yes. Not all but many LLC services offer assistance even after the LLC formation. Some of the companies have special packages for these services while some offer individual services with different charges for each service. Some LLC services also include post-formation services in their pricing plans.
Q: Is it safe to hire an online LLC Service?
A: Yes. All the LLC services reviewed here are safe to hire for online LLC assistance. These companies are well versed with all the legal requirements in forming an LLC. Therefore, utilizing their expertise in the field is very helpful in preventing many risks and hassles in LLC formation.