You have a lot of options when it comes to how you structure your business. One great option is the limited liability company (LLC).
A Limited Liability Company (LLC) is one of the best business structures for small businesses to register their business as a legal entity. There are several benefits available to the limited liability company, including Limited liability, Management flexibility, Ease of setup and operation, and tax flexibility.
If you are new to the world of entrepreneurship, you might not have the money to hire an attorney or Professional Incorporation Service to form an LLC for your business. Don’t worry. It is not difficult to form an LLC yourself. Here I will guide you through the process.
Starting an LLC can be a wise financial move. But don’t assume that you’ll do it for nothing. As an LLC, you must pay the state filing fees and pay to have an agent registered with the state but you can still save a few hundred dollars.
How to form an LLC for Free (in 6 Simple Steps)
6 Steps to Start an LLC for Free
The steps to form an LLC for free or yourself are:
- Select a State
- Decide the Name for your LLC
- Appoint a Registered Agent
- File your Certificate of Formation
- Draft an Operating Agreement
- Apply for an EIN
Select a State
The first thing you need to consider is the state where you want to form your LLC yourself. It is also one of the crucial decisions for your business. It is generally recommended to form an LLC in a state without state income taxes, then you’ll only be responsible for paying US Federal taxes.
Brief about the Best States to Form an LLC in the United States as a Non-Resident:
According to our experience in US Business Formation, 80% of business owners prefer Wyoming over other states.
Wyoming has a $100 state filing fee with a $50 annual fee. Wyoming does not require you to pay corporate or personal income taxes with 4% sales tax and offers you the most powerful asset protection.
Decide the Name for your LLC
The first step to forming an LLC is to select a name for your LLC. Generally, you will need to follow this naming instruction:
- You must include the word limited liability company or LLC in your company name.
- You have to avoid restricted words such as a bank, trust, Law, Attorney, etc.
- You should not include such words in your company name that confuse your LLC with a government agency.
- I also recommend registering your LLC name’s web domain even if you do not want to create your business website today.
Appoint a Registered Agent
The next step to form an LLC is to appoint a registered agent. A registered agent is also known as a statutory agent or resident agent.
A registered agent is a person or a company who sends and receives legal papers on behalf of your LLC. These legal papers include official correspondence like legal summons and filing documents.
Your registered agent must be a resident of a state where you want to start your LLC. If your registered agent is an individual, then he will be a member of your LLC along with you.
Draft an Operating Agreement
An LLC operating agreement is a legally binding business document that entails the ownership of its members, how the company is managed, and the structure of the LLC or limited liability company.
It can provide details such as one meeting being held naming a registered agent, selecting managers, and adding and dropping members.
An operating agreement is not required in every state, but it is highly recommended to have an operating agreement to avoid internal disagreements between LLC members.
Apply for an EIN
The final step is to apply for your Employer Identification Number (EIN) which is also called a Federal Tax Identification Number.
What are the Purposes of EIN?
- An EIN is necessary for your business tax purposes.
- It is also required to open a business bank account in the United States.
- It is also needed when you want to hire employees legally.
Applying for an EIN is quite simple and free of cost. You can quickly obtain this by visiting the IRS.gov website.
I hope you’ve found this guide about forming an LLC for free helpful. However, if you can afford to spend a little money, I recommend you hire a professional incorporation service to help with your business incorporation.
And If you are looking for a professional incorporation service, you are at the right place. We (Micahguru Formation) helped more than 150 business owners like you to get registered their businesses in the US.
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