A limited liability company (LLC) protects your personal assets and maintains limited liability. Forming an LLC gives you flexibility to choose taxation and allows easy transfer of ownership. But forming an LLC can be expensive and time-consuming. There are ways to form an LLC for free or at a discount.
Steps to Form an LLC
- Get a unique business name and address in your state.
- Get the formation document.
- Get a registered agent.
- Fill out and file the document.
LLC Costs and Free Formation
The main LLC cost is the filing fee from forty to five hundred dollars depending on the state. Use an online service and pay only mandatory state fees to form an LLC for free. Some companies falsely claim free registration.
Most business owners form an LLC rather than a sole proprietorship to protect assets if sued.
For Non-U.S. individuals:
- Provide LLC information to get an EIN.
- Craft an operating agreement.
Managing LLC Finances
LLC termination gain or loss is determined per member. Track your investment basis, adjusted annually per your K-1. Compare final distribution to basis to determine capital gain or loss.