How to set up an LLC and sleep at night

I’m always amazed at the number of business entrepreneurs—maybe even you—who do business online without setting up a company first. If you’re one of these people, you’re just asking for trouble.

Countless people simply turn on their computers one day and start engaging in business transactions. Sure, it’s easy to do, but it’s potentially dangerous.

Back in October, I talked about setting up an Internet business. Today, I will go over the steps to setting up a LLC.

First, let me point out that this information is not meant to be official advice. Consult a professional.

The easiest way to set up your LLC will be to hire a company that specializes in this task. I’m not going to recommend any specific service, but a search in your favorite search engine for “set up LLC” will yield many results.

Typically, a service will charge you their fee plus state fees. For instance, one service I recently looked at charged $139 + state fees for their basic service. State fees vary.

Setting up a Nevada LLC

Okay, let’s go over some basic setup for a Nevada LLC.

Your first step is to visit the Secretary of State Web site for Nevada, which is at sos.state.nv.us.

The URL that has the LLC forms is here:
http://sos.state.nv.us/comm_rec/crforms/llc_index.htm

The forms you will need to fill out are:

1. Limited-Liability Company – Articles of Organization
2. Initial List of Managers or Members

The Articles of Organization costs $75 to file and the Initial List of Managers or Members costs $125. Each year you’ll submit an Annual List of Managers or Members, which costs $125.

So, we’re at $200 initially. You’ll need to either be a RA (Registered Agent) or know one that you can use. A Registered Agent is someone who is located within the state, has a street address, and will accept mail on behalf of your company.

If you setup your company through a service, this should be a service they offer. They may charge a small annual fee, or it may be in your original cost.

The big lesson to learn here is that setting up a company isn’t a one-time cost. Paperwork must be filed, with the appropriate fee, annually. Many services will do this for you and bill you before it’s due.

If you do it yourself, the time it takes to complete the registration with the state depends on the state. If you’re in a hurry, you can pay an expedite fee. For instance, you could speed up your Nevada filing, so it’s completed in one day, two hours or even one hour.

You’ll want to pay extra to get certified copies back. The $60—for two forms—you’ll spend is worth it. These forms will be used at the bank to open a company bank account.

I don’t recommend you do this process yourself if it’s your first time. The little bit of cash you might save won’t matter if something gets messed up.It could end up costing you a lot more.

Most services charge $25 for a Tax ID (EIN – SS4). You can get this for free by going to IRS.gov and filling out the SS-4 form online. It’s really not that complicated. Again, if you have better things to do, the $25 isn’t too bad. Make sure they give you a copy of the form. If nothing else, you can use it as a guide for your second company.

In closing, if you are really confused, check out an LLC book by Nolo Press. They put out good stuff. Their books will help guide you through the process.