So you’ve taken the steps to starting an online business – now what? Today’s post is dedicated to shedding light on an important aspect of establishing your online business: How long does it take to get an LLC? If you’re a first-time business owner, and are unsure of how to start a legit business, you’re not alone. The idea of forming a Limited Liability Company (LLC) might seem daunting and overwhelming, but this guide is meant to provide you with a clear understanding of what to expect.
Before we delve into the timeline, let’s briefly cover what an LLC is and why it can be beneficial for your online business. An LLC is a type of legal business structure that combines the limited liability protection of a corporation with the flexibility and simplicity of a partnership. By forming an LLC, you create a separate legal entity for your small business, which is meant to protect your personal assets from business liabilities, providing you with a level of financial security.
For small business owners operating in the digital landscape, where risks and uncertainties can abound, having an LLC can offer a sense of security and professionalism. It allows you to pursue your business ideas while minimizing personal risk and financial exposure. Without an LLC, your personal assets are at risk. (Please note that in some states, single member LLCs are not afforded as much personal liability protection as multi-member LLCs. That’s why it’s always important to research your state’s LLC laws and/or speak to an attorney near you.)
While the benefits of an LLC are undeniable, the process of obtaining one can appear labyrinthine, especially to those who are new to the business world. Forms to fill out, legalities to navigate, and government agencies to deal with – it’s no surprise that the process can seem overwhelming.
Today, I’ll demystify the journey of obtaining an LLC and give you a comprehensive understanding of the typical timeline. Each step may require time and attention to detail, but with the right guidance, you can successfully establish your LLC and embark on your entrepreneurial journey with confidence.
So, without further ado, let’s explore the essential steps involved in obtaining an LLC and find out how long this process might take for you. Understanding the turnaround time will empower you to plan efficiently and move forward with your business endeavors with clarity and purpose.
How Long Does It Take To Get An LLC
The timeline for obtaining an LLC can vary depending on several factors, and it’s crucial to understand the different variables that can influence the LLC turnaround time. One of the main factors that affect the duration is the method of filing. Generally, there are two ways to form an LLC: filing online and filing by mail. Filing online is usually the quicker option, as it streamlines the process and reduces paperwork, while filing by mail may take longer due to the additional time required for physical delivery and processing.
Moreover, the state in which you are forming the LLC plays a significant role in the timeline. Each state has its own set of rules, regulations, and processing times, which can differ significantly from one another. Some states have a more streamlined process and quicker turnarounds, while others may have more extensive requirements that can elongate the waiting period.
The time of year can also impact how long it takes to get an LLC. During peak business seasons or specific times of the year, government agencies responsible for processing LLC applications may experience a higher volume of requests, resulting in longer processing times. On the other hand, if you choose a less busy time, you might experience a more expedited process.
To expedite the process further, some states offer the option to pay an additional fee for expedited processing. This can significantly reduce the waiting time and allow you to get your LLC approved more swiftly. However, it’s essential to weigh the benefits of this filing fee against any additional fees to determine if expedited processing is the right choice for your small business needs.
Another crucial factor to consider is the accuracy and completeness of your application. Any errors or omissions in your paperwork can lead to delays or even rejection of your application. Ensuring that all necessary documents are correctly filled out and submitted will help keep the process on track and avoid unnecessary setbacks.
How To Get An LLC For Online Businesses
Step 1: Choose a Name and Check Availability
The first step in getting an LLC for online businesses is to choose a unique and appropriate name. Your desired name must comply with your state’s naming rules and should not be already in use by another business. The Secretary of State’s office typically handles the name search and reservation process, allowing you to check if your desired name is already in use by other business entities. This process usually takes a few minutes to a few business days, depending on the state’s online database and workload.
Step 2: Appoint a Registered Agent
An essential step in getting your LLC is appointing a registered agent. This individual or service acts as the official point of contact between your LLC and the state’s government. They receive crucial legal and administrative documents on behalf of your business, ensuring compliance and prompt communication. Whether you choose to be your own registered agent (not allowed in all states, but some do), hire a professional service, or have your attorney or CPA fulfill this role, having a registered agent is a legal requirement and safeguards your privacy and operational efficiency.
Step 3: Prepare and File Articles of Organization
Once you have a name, the next step is to prepare and file the Articles of Organization with the Secretary of State’s office in the state where you intend to operate your business. This document officially registers your LLC with the state and includes essential details such as the business name, address, LLC members’ names, and the purpose of the LLC.
The filing time can vary depending on your state, ranging from a few business days to a few weeks for processing. There is also a primary fee to form an LLC. This fee covers the cost of processing and filing your LLC formation documents with the Secretary of State’s office. The filing fee can range from around $40 to $500 or more, depending on the state.
Step 4: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a unique nine-digit number issued by the IRS to identify your business for income tax purposes. It acts like a business social security number. You’ll need an EIN if your LLC has more than one member, hires employees or elects to be taxed as a corporation. You can get an EIN even if it’s just you opening the business and you have no immediate plans of hiring (that’s what I did!).
Applying for an EIN is typically a straightforward process and can be done online through the IRS website. There is no cost to obtain an EIN from the IRS. You will receive your EIN immediately upon completion of the online application via an electronic letter. Make sure you keep the letter the IRS immediately generates for safe keeping. You’ll need it for Step 7 when you open a business bank account, too.
Step 5: Draft an Operating Agreement
While not all states legally require an Operating Agreement, it is highly recommended to have one in place, especially for multi-member LLCs. This document outlines the internal operating procedures and ownership structure of your business, including member responsibilities, profit-sharing, decision-making processes, and more.
The time needed to create an Operating Agreement can vary based on the complexity of your business structure and how quickly all LLC members can come to an agreement. If you don’t draft and execute an Operating Agreement, your state’s LLC law automatically applies. Whereas if you draft your own Operating Agreement, you can elect different rules and obligations than what your state does.
Step 6: Obtain Necessary Business Licenses and Permits
Depending on your industry and location, you may need to obtain specific licenses or permits to operate your online business legally. The requirements can vary widely, so research the regulations that apply to your business type and location. The time it takes to obtain these business licenses and permits can range from a few days to several weeks, depending on the issuing authorities.
Step 7: Open a Business Bank Account and Credit Card
To keep your personal and business finances separate, it’s crucial to open a business bank account for your LLC. Different banks have different application processes and requirements, and it may take a few days to a week to complete the account setup. When I setup my own business, I went to a local branch and set it up the same day. To setup a business bank account, you’ll need to bring a copy of your EIN letter from the IRS, any registration documents you’ve received from your state, and a small amount of cash to open the account. Ask the bank if they’re able to give you a business debit card.
Once your business is established, you will be able to apply for a business credit card if you would like to use one. Using a business credit card is another way to keep business finances separate from your personal finances. Using a business credit card responsibly and making timely payments can help you establish and build a positive business credit history.
Step 8: Register for State Taxes
If your state imposes income tax or sales tax, you’ll need to register with the appropriate state tax authorities. The time for registration can vary based on your state’s procedures, but it is essential to complete this step before you start conducting business. Some states (e.g., New Jersey) include this step as part of the registration process.
Step 9: Comply with Ongoing Requirements
After forming your LLC, you must stay compliant with state regulations and requirements. This may include filing annual reports, renewing licenses, and maintaining accurate records. Regular compliance will help ensure the smooth operation of your business entities without any interruptions. Make sure you keep your contact information up to date so that you receive all of the renewal paperwork. Now that you’ve done all of this work to form an LLC, you don’t want to let your business license lapse.
Ready to legally protect your business?
If want to learn how to form an LLC, which contracts you need, and how to keep your content safe online, watch my free workshop ‘5 Steps to Legally Protect & Grow Your Online Business’ right now by saving your seat here.
In that workshop, you’ll learn:
- How contracts can actually save your (vegan, GF) bacon — if you have the right one.
- What your website needs to be legally protected.
- How to keep copycats off your content.
- The mindset shift you’ve got to make if you want to actually grow your business without looking over your (online) shoulder.
- The only way to form your business so that you’re personally and professionally protected.
You’re only 60 minutes away from the peace of mind that comes with having a legally sound business…
Ready to watch? Sign up for my free legal workshop right here.