Some Pennsylvania entrepreneurs decide that for their new startup company, forming a limited liability company (LLC) is the way to go. According to an article in Forbes magazine, an LLC is a popular choice because of the limited liability it offers to its owners, as well as a lack of double taxation that is usually found with C corporations. As with other business formations, there are a number of general requirements expected in forming an LLC.

Any LLC needs a name. A few issues exist in choosing the right name. First, whatever the company name is, it must end with “Limited Liability Company” or at least a legally recognized abbreviation, such as “LLC.” The company name cannot contain terms that state law prohibits. For example, the business cannot include the word “incorporated” or “corporation” as an LLC is not a corporation. Any business name should also not infringe on another’s trademark, and must be distinguished from any other LLC that is registered with the state’s secretary of state office.

Business owners also require an articles of organization. This document is filed with a state’s secretary of state, and includes important information on how the LLC is to be organized. These provisions include listing the LLC’s registered agent, the person who receives legal documents on behalf of the company, including subpoenas and complaints. The articles also list the purpose of the LLC. In some states, the secretary of state will provide an articles of organization form that lists an LLC’s general purpose. Also, filing this document will also require paying a filing fee.

Business owners also need to consider writing up an LLC Operating Agreement. This document delineates the rights and responsibilities of the owners to the company and setting up how the business will operate. An operating agreement will resolve certain questions about the company, including:

  • Who manages the LLC
  • How many people will manage the LLC
  • The number of officers to be appointed
  • Rules for LLC member meetings
  • The distribution of profits among members

Also, depending on the goods and services offered by the LLC, business owners will have to obtain the proper business license. Such licenses may be required at the federal, state or even the city level. Prospective LLC owners will also have to acquire an Employer Identification Number (EIN) from the IRS.

This article is intended to educate the reader about LLC formation and should not be taken as legal advice.