7 Essential Steps in Legally Starting Your LLC

Calling all small business owners (and future business owners)!

Have you ever wanted to start a business, thought about starting a business, or dreamed of what it would be like to call yourself a business owner? Are you a budding entrepreneur with a side hustle at a tipping point into "more than I can handle" without it being a full-time gig? Are you thinking, right now, that you would like to be the master of your destiny, captain of your ship, or director of your own future?

And have your thoughts and dreams, like mine, ever been sabotaged by not knowing exactly how to do it, legally speaking? 

If you have ever been stumped by the hurdles of legally starting a business, then I would like to walk you through the step-by-step process that I have used numerous times with clients, in multiple industries, to help them get up and going in their ventures.

1. Research potential names and choose a winner

a. Pro Tip - You can e-mail the Secretary of State’s Office and make general inquiries about the availability of a name. Doing this increases the chances that your filing is accepted on the first try.

2. File your Certificate of Formation with the Secretary of State

a. Pro Tip - Use the Secretary of State’s forms available through their website. This eliminates the chance that your filing would be rejected for improper form.

Ex. For Texas: Corporations Section Forms (state.tx.us)

3. Draft your Company Agreement

a. Pro Tip - While this will not be filed with the state, your bank will require a copy. Don’t forget to answer these essential questions:

i. How are the membership interests divided?

ii. Where will the initial, and future, capital contributions come from?

iii. How will the entity be taxed?

iv. What are the Management roles?

v. How and when do Members vote?

vi. How can members be added?

vii. What is the Company’s recourse if a member defaults on obligations?

viii. What are the restrictions on transfers of a member’s interest?

ix. How to resolve a dispute among members.

4. Pass your Resolution adopting your Company Agreement

a. Pro Tip - This may be the most overlooked of the start-up steps, but it is critical in proving that you are treating this as a real business, and not just a hobby.

5. Apply for and receive Employer Identification Number

a. Pro Tip - Make sure you use the official Internal Revenue Service portal for this application online. There are plenty of scammers and third-party vendors willing to sell you something that the IRS provides for free.

Apply for an Employer Identification Number (EIN) online | Internal Revenue Service (irs.gov)

6. Open your corporate bank account

a. Pro Tip - Open your commercial accounts where you already have a banking relationship. Familiarity is key to trust, and trust makes business move faster.

7. Prepare your Company Binder

a. Pro Tip - While digital files should be kept, you should build and keep a hold-in-your-hand binder for your company’s most important documents. 

Of course, if you get stuck or have questions, do not hesitate to reach out. There are few ways you can provide your business with a stronger foundation than to set its legal moorings properly. Many times, its necessary to call in someone who has walked through the legal start-up process before. Let us help you avoid creating problems that someone will have to solve in the future (Hint: they don't get less expensive). Please let me know how I can be of service.

Thanks again,

Joshua