Choosing an LLC formation can be beneficial for business. However, it requires the completion of a multistep process. A common concern of many is how long the whole ordeal will take.
Understanding LLCs
An LLC is considered as an independent entity that is created under state laws. All states have their regulations governing this type of business entity structure.
The owners of an LLC are called members. In most cases, they are also the ones managing the company. If there are a lot of members or some of them prefer to be passive owners, then the LLC may decide to appoint some members or nonmembers to serve as company managers. These members, like corporation shareholders, enjoy asset protection. LLCs have a limited liability feature. That means the personal assets of an LLC member will not be affected by the actions or obligations of the company.
The LLC Formation Process
As stated earlier, there are several tasks that a company needs to accomplish in order to form an LLC. That includes the filing of formation documents and payment of fees. Some states may also have additional requirements.
How Long It Takes
Depending on the company and the state, the LLC formation process may take a number of days or weeks to complete. Here are the key steps to keep in mind, as well as the estimated time necessary to accomplish them:
- Choose the company name.
The period necessary to think of a company name will vary depending on the company. Aside from selecting a creative name, it is equally important to make sure that it abides by the naming regulations of the state.In most states, the rules include having a proper designator. It can be the term “Limited Liability Company” or “Limited Company.” The use of any of their abbreviations, such as “LLC,” “L.L.C.,” “LC,” “L.C.,” or “Ltd. Co.,” is accepted.LLCs are not allowed to include a term that could confuse them for a government agency. There are also restricted words that may require additional paperwork.Additionally, most states require an LLC to ensure the business name is distinguishable. That means if it is already in the state records, it can not be used, so a name availability check may be necessary. Usually, this can be done in minutes. A simple search on the business entity database of the governing state agency may be enough. Most states allow this on their websites.States also allow the reservation of a business name. If a company already has a name in mind but is not yet ready to proceed with the formation process, it can apply for a name reservation. This filing comes with a fee. Usually, doing this will reserve the name for about 120 days. Some states may offer less or more time. Getting the approval for the reservation may take a few days. - Prepare and file formal paperwork for the LLC formation.
To formally register the business, a company will have to prepare and submit formation documents. This paperwork is often called the Articles of Organization or Certificate of Formation. It needs to be submitted to the governing state agency along with the filing fee. The necessary information and the cost of filing will depend on the state where the LLC will be formed.The preparation time would depend on how long a company will take to prepare the requirements. These include the selection of a business name and the appointment of a registered agent. It may take weeks. Some may only need a few days.There are states that offer an online filing option. In such cases, it would probably take a few minutes to accomplish the form and submit it to the governing state agency, which is usually the Secretary of State. Meanwhile, those who choose to submit by mail may have to give some time for the mailing process. In-person filings can take a few minutes or hours, depending on the number of people in line. - Receive the state’s approval.
After submitting the Articles of Organization, the next thing to do is to wait for the approval of the governing state agency. If the company receives a rejection, it has to find out what mistakes it made in answering the form or if there are requirements it failed to meet. Most of the time, the state agency will provide an explanation. Once the company figures it out, it will have to prepare and file another form.The processing time for the approval or rejection of the formation documents will depend on the state. In most cases, it would take around 7 to 10 business days. Some can get back to a company after only 3 business days. However, there are also states that could take up to 6 weeks. Those that offer online filing usually finish processing documents faster. States that only accept mailed submissions typically need more time.There are also states that offer expedited processing services. Those could take anywhere from a few hours to a few days. Taking this route will require the payment of additional fees.
Get Help With An LLC Formation
LLC formation will not only keep the state informed about the business operations of a company. It will legalize the business and protect the company and its owners, too. However, it may take some time to successfully register with the state. States may also have additional requirements such as getting certain business licenses and permits.
For some companies, it may be hard to find time to take care of this process. After all, they will have other responsibilities that are integral to achieving success.
Fortunately, there are business filing service companies that can streamline the whole ordeal. DoMyLLC is one of them.
Our team of experts can handle the preparation and filing of formal paperwork. We can also personalize solutions to ensure that our services suit the needs of the client. Contact us today to find out more about what we do and how we can help you streamline the business formation process.