How Long Does It Take to Form an LLC?

How Long Does It Take to Form an LLC

Do you have plans to start your own business? Perhaps you are thinking of an LLC? Alright, let’s discuss how long it would take to form an LLC.

Forming a limited liability company (LLC) is momentous for most business people. It offers several benefits, including flexibility, some tax advantages, and more. It also helps protect your personal bank account and properties just in case the business runs into a brick wall. However, for unknown reasons, people tend to pay little attention to the time it takes to get it all set up.

But why does this matter? Well, how soon you can start an LLC will determine how soon you can open your office doors for business, how you organize things, and even how you get start-up capital. Therefore, it’s crucial you learn how long setting up an LLC might take so as to make better plans.

A large study revealed that one of the causes of small businesses’ failure is a lack of planning say, not allocating sufficient time when trying to form an LLC. When starting a new business, time is of the essence. So, having this information will help you allocate your time better and facilitate better business days ahead.

That’s why I’m writing this post to help you fully understand the turnaround time of an LLC formation. Let’s get into it!

How Long Does It Take to Form an LLC?

On average, an LLC case can take anywhere from two to three weeks from start to finish. But that’s only a general estimate. The truth is, it’s a bit like predicting the weather. You’ve got a general idea, but there’s always room for surprises.

Why the uncertainty? Well, each state has its own way of dealing with the paperwork and, thus, the time it takes to do that. Some states are like that friend who arrives early to everything; they will form your LLC in just a few days. As for others, let’s just say they operate on a more relaxed timeline. 

Some factors can influence how fast or slow things go: 

  • For starters, LLC filing online is usually faster than when done via mailbox.
  • If you’ve dotted all your i’s and crossed all your t’s on your paperwork, that’ll help too. However, if you made a mistake or omitted something, the process is going to slow down.
  • Timing also matters. Filing companies should avoid initiating the process at particular periods – end of the year or start of a new tax season. That’s when state offices are swamped, and your application might end up at the bottom of a very tall pile.
  • Money talks, too. Each state offers expedited service and charges a small extra fee for it, although most will process requests within three to four weeks. If time is of the essence and you’ve got some cash to spare, this could be your fast pass.

LLC Formation Steps

Let me digress a little bit: check out this post if you are still pondering on what an LLC is and how it works. You will find an in-depth breakdown of the basics of what an LLC is all about. I also answered the question of whether you need an LLC for an online business and if you can use one LLC for more than one business.

Steps to forming an LLC

Back to our main subject for today, forming an LLC successfully and swiftly does involve taking certain key steps. Here is a brief overview:

Step 1: Choose Your LLC Name

First things first, your LLC should have a name, and here are the ways to go about it:

  • It should be unique in the state; thus, ensure you select a name that has not been adopted by other companies.
  • Add LLC or Limited Liability Company to your company’s name.
  • You’re advised to stay away from specific terms in titles like “bank” or “insurance” if you don’t possess the required credentials.

This step can take as little as a few minutes or as long as a few days if you are creative or change your mind a lot. Pro tip: Most states have an online database where you can confirm the availability of a name. Do this before you fall in love with a name!

Step 2: Appoint a Registered Agent

Next up, you need a registered agent. He or she will be your LLC’s single point of contact for the legal aspects. They’ll:

  • Issue and/or receive official papers in the interest of your LLC.
  • Be available during business hours
  • Have a physical business address in the state (P.O. boxes are not acceptable).

You can act as your own registered agent, use a trusted employee, or hire an LLC professional service provider. This step is typically fast, perhaps 30 minutes to an hour if you’re researching options.

Step 3: File Your Articles of Organization

This is the big one, folks! Your Articles of Organization (sometimes known as the Certificate of Formation) is your LLC’s birth certificate. You’ll need to provide:

  • Your LLC’s name
  • Your registered agent’s details
  • Your LLC’s purpose statement is (make sure your purpose is broad!).
  • Management structure (member-managed or manager-managed)
  • Names and addresses of all LLC members.

Generally, it can take about 30 minutes to an hour if you have all the documents ready for filing. But, don’t forget that this stage is where state processing times come into play. So, it could take anything from a few days to a few weeks to get approval.

Step 4: Draw up an Operating Agreement

Technically, not all states need this, but for your own good, get one. An operating agreement outline:

This may take between a few hours and a few days, depending on the complexity of your LLC structure. Take your time; this document could save you a lot of heartache in the future!

Step 5: Get an Employer Identification Number (EIN) from the IRS.

An employer identification number (EIN) from the IRS is usually required for most businesses to function. An EIN is like a Social Security number, but for your business. You generally require one even if you don’t have any employees yet. The IRS uses this number to keep track of your business, especially when tax season comes around.

Step 6: Register for State and Local Taxes.

Depending on the nature of your business and its location, it may be necessary to register for some of the state or local taxes. This may be sales tax if you sell items or taxes that you need to deduct from your workers’ pay if you have employees.

Step 7: Obtain Necessary Business Licenses and Permits.

You might need special permits or licenses to run your business legally. The particular license or permit you need may depend on what kind of business you have and where it is located. Contacting either the office of the secretary of state or certain local government agencies will help clarify this requirement. They can inform you which forms to fill out and what regulations to obey. 

The Best States for LLC Formation

Now, let’s talk about location, location, location! Not all states are created equal when it comes to forming an LLC. Some roll out the red carpet, while others… Well, let’s just say they make you work for it. I don’t usually suggest registering your business in a state other than the one you live in (at least, not when you are just getting started). However, I know there are a lot discussions about the advantages some states offer, so here’s a rundown of some states that are known for being particularly LLC-friendly.

Delaware

Delaware is proving to be very popular among companies. Loads of big enterprises have set up shop there, including over half of the ones you see on the stock market. They’re also very fast, usually solving all your paperwork issues in less than a week. You can even do the entire process via the Internet.

It’s pretty cheap to get started. If you’re signing up from the US, it would cost you $90 to get into the system, while the global rate is $200. Additionally, the taxes are $300 annually, and, unlike other registered limited companies, you don’t have to bother with yearly reports.

Wyoming

It seems like Wyoming has been converging with a lot of business people recently. The state was among the first to introduce the LLC concept and did not impose a state income tax. It’s also easy to set up, and the filing fee is as low as $100. They are pretty fast with it, normally getting you all set within the week, if not less.

Nevada

Nevada is also relatively fast; it normally takes anywhere between one and two weeks. They are particularly keen on insuring your personal belongings in case your business ventures hit the precincts. People also like Nevada because it’s easy on the wallet; there is no state income tax, no tax on businesses, and no annual fees for existing businesses.

New Mexico

New Mexico is a preferential state for many businessmen and women. They keep your private information far away from being public records and protect your business as well. Furthermore, you don’t have to file boring yearly reports. This state also charges one of the lowest fees in the US for establishing a business.

South Dakota

South Dakota has been emerging as one of the most sought-after destinations for business. It’s affordable and has no strict guidelines. They don’t charge income tax and there’s no tax on death as well. Also, maintaining the legalities of your business annually won’t burn a hole in your pocket.

Be sure to talk to your attorney and CPA before choosing to register your business in another state so you understand the advantages as well as the hurdles involved in doing so.

Every big business started as a small idea
Every big business started as a small idea you may be 2-3 weeks away from building your own business empire.

It’s always fascinating to start a business venture, and an LLC can be your great companion. It’ll shield your personal assets while giving your business some serious street credibility.

However, your biz needs some other things besides an LLC. One of such is using state laws to protect your business. That’s where the Ultimate Bundle® enters the equation! It is filled with readily customizable legal templates for airtight contracts, rock-solid website policies, and insurance coverage. It’s a one-stop shop, providing everything you will ever need.

Free legal training with Sam Vander Wielen

But wait, there’s more! I also have a free legal training to help guide you through the legal maze for your new start-up. You can also subscribe to my blog and podcast where I routinely dish out helpful information and tips regarding starting, growing, and protecting your online business. See you there!

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