do you need a business plan to form an llc

How to Form an LLC

Brette Sember

10 min. read

Updated October 25, 2023

You have a number of different options when it comes to structuring your business. You might want to consider a limited liability company, or an LLC, because in some ways you get the best of both worlds:

• You get the benefit of personal liability protection, as you would with a corporation.
• You keep things simple with a business that’s easier to run, similar to a partnership or sole proprietorship (for example, you aren’t required to file corporate taxes).
• Who can form an LLC?

The good news is that just about anyone can start an LLC. You don’t need a huge company, lots of employees, or anyone but yourself (except in Massachusetts, where you need to have two owners).

The owners of an LLC are called “members” and there are no special qualifications required, but in most states, you can’t form one if you are in certain licensed professions, such as an attorney or a medical doctor. In that case, you can form a  professional corporation , or PC.

You can have as many members (owners) as you want in your LLC, but most LLCs keep the ownership small (no more than five members), since you do need to work closely with each other and have a shared vision. Be sure the members are people you trust and can work with. A good LLC is like a marriage in that way.

• How to form an LLC
• Create a business plan . Once you’ve decided that an LLC is a good fit for your business, you should start by creating a  business plan  (although it is not required), so that you have a roadmap for what you’re going to do and how you’re going to do it.
• Name your business . Next, you need to do a search within your state to make sure no one else is using the same business name you have chosen (it’s confusing for everyone if there are two Bob’s Plumbing companies). Your secretary of state’s office will do the search and give you clearance if the name is available.
• Choose a  registered agent . This is a person who will accept legal service and notifications on behalf of your LLC. It doesn’t have to be you or any other member; it just has to be someone within the state willing to accept those documents (there are registered agent companies you can contract with). Choosing someone else frees you up from having to be available for service.
• File your articles of organization . To make your LLC official, you’ll need to fill out an articles of organization form from your state that includes the LLC name, registered agent, names of members, and other basic information. You’ll file this with the secretary of state, often in the corporation division. There will be a filing fee that is usually under $100.
• Write an operating agreement . Use your business plan to create an  operating agreement  for your LLC. This does not have to be filed with the state, but it is an essential document you will rely on. An operating agreement includes identifying information about the company, a statement of the company’s intent, the business purpose of the LLC, the term of the LLC, how it chooses to be taxed, and how new members will be admitted, as well as other general operating provisions.
• Comply with local requirements . Be sure to complete any local licensing or registration requirements for businesses in your county or city. In certain locations, you may be required to file a DBA (or “doing business as”) document that identifies the individuals behind the LLC.
• Managing your LLC

Now that you’ve set up your LLC, you can get down to the business of actually running it—and that means working with the other members successfully. There are two different ways you can choose to manage your LLC:

• Member management . In this method, the members are the ones actually doing the hands-on management. All the members vote on decisions and work in the business. This means you’ll need to have a clear business structure and defined roles. Your operating agreement should set out what each member’s responsibilities are and how the business will actually run.
• Manager management . In this method, the members select one or more members or bring in an outside person (such as a CEO or COO) who will take on the responsibility for day-to-day management of the LLC. The members who are not in managing roles don’t actually control how the business runs. Instead, they function more like investors who have put up their money and are waiting to see their profits. Only those people who are named as managers are able to vote on management decisions and do business on behalf of the LLC.

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• Liability protection

The main reason most people decide to form their small business as an LLC is to protect themselves from liability. An LLC shields you from liability for the company’s business debts and claims. So, if your business gets behind on a business line of credit, the bank can sue only your company and reach only your company’s assets. It can’t sue you personally or try to take your house or your car or anything you own in your own name.

You are on the hook, though, for any money you’ve invested in the LLC—because those funds belong to the LLC, but your liability is limited after that point.

• The exceptions to the rule

LLC personal liability protection can be a great shield, but it doesn’t protect you from everything. Personal liability exceptions to LLC liability protection are the same as those faced by corporations.

You can still be personally liable as an LLC member if you:

• Personally injure another person directly
• Give a personal guarantee for a loan or debt for your LLC and the LLC then defaults on it
• Do not pay the taxes your LLC withholds from your employees’ pay
• Cause harm to the LLC or another person by intentionally doing something fraudulent or illegal

The biggest pitfall that will expose you to liability is failing to keep the LLC and your personal affairs separate. You have to take your own LLC seriously if you want other people to.

If you’re just using your LLC bank account as your own personal checking account or you don’t pay your business bills from that account, then it’s going to be clear that the LLC truly is not a separate entity. In your own mind, you need to think of it as separate and act accordingly.

• How to separate your LLC from your life

In your mind, work is just part of your life, so it can be hard to keep your LLC separate and keep a clear line between your personal life and your company. It’s essential you do so, though, if you want to enjoy the limited liability protections.

To protect your LLC status:

• Have an operating agreement .   Set out your business details in writing, so you and the other members are clear on your mission and your procedures and practices.
• Bank separately .   Use a business bank account for your LLC, deposit all business checks there, and pay all business expenses out of it.
• Fund your business . You and the other members should invest enough money so that your LLC can run itself, pay its expenses, and be financially independent.
• Be legit . Get a federal employer identification number (EIN) for the LLC and keep a clear account of your business’s finances, so there can be no question that it is a separate entity.
• Be honest .   Don’t misrepresent the state of your company’s finances to creditors or vendors. 
• Business insurance

Business insurance can be an added layer of liability protection for you from your LLC. An insurance policy will cover liability that might affect you personally.

For example, if you own a hair salon and accidentally graze a client’s face with your scissors, you could be personally liable, since it is a personal act that caused harm to another person. But a good business insurance policy will cover this mistake and help protect your personal assets.

Business insurance also protects the LLC itself from lawsuits and claims. For example, if you own a landscaping business and one of your mowers accidentally hits a client’s marble stone lion and damages it, your business insurance will pay the claim. However, business insurance only covers liability for negligence—it doesn’t cover unpaid business debts.

While an LLC offers some tax advantages, you’ll still be paying taxes, and it’s important to do so on time and accurately. The LLC itself must file  IRS Form 1065  yearly. This is the same form used by partnerships and it reports each member’s share of the profits and losses from the LLC.

Learn more about how to  file your LLC taxes in this article .

Although it must file a form each year, your LLC enjoys pass-through tax liability. This means the LLC itself does not pay taxes. Instead, the LLC members are responsible for paying taxes, and each member pays their own share. So, if you have two members who are equal owners, each will be responsible for reporting half of the profits or losses for the LLC on their own personal tax returns. You’ll have to make quarterly tax payments so long as you own the LLC, so be sure to stay on top of that.

• Closing your LLC

Should you reach the point where you’re ready to close the doors to your business, there are some steps you’ll need to take to officially end your LLC. In most states, unless your operating agreement says otherwise, when one member wants to leave the LLC, it must be dissolved. If more than one member wants to leave, you have the same result. And if you’re the sole member, it’s up to you.

If you want to avoid the problem of having to close down because one member wants out, you can include  buy-sell guidelines  in your operating agreement that set out what will happen if one member wants out, decides to retire, dies, or becomes disabled.

To close down the LLC, you need to pay off remaining business debt, fulfill any remaining obligations (such as shipping orders), and decide if you will sell business assets (such as real estate or equipment) or divide them among the members. You must pay all tax responsibilities and notify all of your creditors that you will be closing.

You must file to  dissolve the LLC  with your state as well. Then the members must divide any remaining assets or profits among themselves, in proportion to their ownership amounts. One or more members can decide to open a new LLC if they choose, and this may be the thing that makes the most sense if you’ve been forced to close down due to one member leaving.

Is forming an LLC right for me?

Only you can answer that question, after taking into consideration your business goals and financial needs—including what types of liability issues could arise specific to the services you provide.

Whether you’re a solopreneur or building a fast-growing startup, forming an LLC can be an effective way to combine business liability protection with a flexible form of organization that’s easier to manage.

When you’re ready to form an LLC, you’ll also want to decide whether to handle the filing and paperwork on your own, or to ask a provider like  LegalZoom  to help.

Brette Sember, J.D. practiced law in New York, including divorce, mediation, family law, adoption, probate and estates, bankruptcy, credit, and much more. She is the author of more than 40 books, many of them legal self-help.

Table of Contents

• Is forming an LLC right for me?

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Step 1: Choose a Business Name

Step 2: research state requirements, step 3: prepare llc formation documents, step 4: appoint a registered agent, step 5: file llc formation documents, step 6: obtain an ein and business licenses, step 7: maintain compliance and record-keeping, is an llc right for you, the bottom line.

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How to Start an LLC: A Step-by-Step Guide

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A limited liability company (LLC) is a business structure that helps shield the personal assets of the owner or owners in the event of a lawsuit, legal judgment, or bankruptcy. This article explains the steps involved in forming an LLC, as well as how to decide whether an LLC is the right business structure for you.

Key Takeaways

• Limited liability companies (LLCs) provide legal protections for their owners if the business is sued or goes bankrupt.
• Unlike sole proprietorships, LLCs must register with their home state and any other state where they plan to do business.
• In addition to the initial filing requirements, states have ongoing compliance rules that LLCs must follow.
• LLCs must also obtain an employer identification number (EIN) from the Internal Revenue Service (IRS).

Unlike a sole proprietorship , which can simply do business under its owner’s name, LLCs must register a formal name with their state. Typically, the name must clearly indicate that the business is an LLC.

State laws may prohibit or restrict the use of certain words in business names, so it’s worth learning the naming rules for your state and any other states where you plan to do business. You can also ask the state offices where you will be filing your paperwork to check their records and make sure that the name you have in mind isn’t already taken.

Otherwise, the general rules for naming any kind of business also apply to LLCs. Try to make it unique and memorable. Consider making it specific enough that people will have some idea of what your business does, but not so restrictive that it will no longer be a good fit if you decide to diversify and expand into other areas.

Your LLC can have only one legal name at a time, but it can have an unlimited number of DBA (doing business as) names, which can be used on your website, in ads and promotions, and elsewhere.

LLCs must generally be registered in their home state and any other states where they operate. According to the U.S. Small Business Administration (SBA) , that can include having a physical presence or employees in a state, meeting regularly and in person with clients in that state, or if the state accounts for a significant portion of the company’s revenue .

In most states, registration is handled by the secretary of state’s office, or a business office or agency, which can provide details on their state’s requirements. Today, the registration process can often be completed online.

In general, anyone who wants to form an LLC must create and file two documents with the appropriate states: articles of organization and an operating agreement.

The articles of organization provide basic information, such as the company name, its address, and its members (as the owners are called). The operating agreement goes into greater detail about the company’s decision-making structure and the role that each of its owners will play in making those decisions.

Regarding LLC operating agreements, the SBA notes, “It’s widely recommended to create one to protect yourself and your business, even if your state doesn’t mandate it.”

States require that the owners of an LLC have a registered agent—a person or company designated to serve as the primary contact point between the state and the LLC for any legal or tax matters. In preparing articles of organization for the states where it plans to do business, the LLC will need to identify a registered agent, so this is a decision that has to be made early in the process, although LLCs can change registered agents later.

LLCs can select one of their owners, their attorney, or someone else they know to be their registered agent. However, experts generally advise choosing an individual or company that does this professionally. A professional registered agent is likelier to know the rules and be available whenever needed.

As mentioned, an LLC needs to file certain formation documents with both its home state and others where it intends to do business (often referred to as “foreign states”). Each state has its own procedures, but instructions—and often applications—are available online.

The filing fees tend to be relatively modest—rarely exceeding $200 in most states—but can add up for an LLC that plans to operate in many locations.

LLCs must obtain an employer identification number (EIN) from the Internal Revenue Service (IRS) to use on their tax forms and for other purposes. They can apply online at the IRS website and receive a number right away. There is no charge for this service.

In addition, the new LLC may need to apply for federal or state business licenses or permits. This depends largely on the nature of the business. For example, the federal government licenses some companies in the agriculture, transportation, and broadcasting industries, among others. States may require licenses from businesses such as dry cleaners, plumbers, and restaurants.

Once it has been successfully established, an LLC must keep up with a variety of ongoing compliance rules. The SBA divides these into external and internal requirements.

External requirements are things that the LLC must do to satisfy federal and state government rules, such as filing the proper forms and paying taxes. Internal requirements are matters to which the LLC must attend in order to comply with the LLC’s own organizational rules, such as proper record-keeping and holding annual meetings for members.

Most external requirements are imposed on the state level. According to the SBA, those typically include:

• Filing an annual report or biennial statement, depending on which the state requires.
• Paying statement filing fees and possibly franchise taxes . Franchise taxes don’t refer to franchises like hamburger chains, but to taxes that some states impose on companies for the right to do business there.
• Updating the LLC’s articles of organization with the state if something significant has changed, such as a new company name or address or new owners.

As to internal requirements, the SBA notes that the rules for LLCs are more flexible than those for corporations, but says LLCs “are generally advised to maintain an updated operating agreement, issue membership shares, record all membership interest transfers, and hold annual meetings.”

LLCs are more complicated to start up and maintain than sole proprietorships, but they offer greater protection for the owner’s personal wealth. If you have a lot of assets that could be at risk, an LLC might be the better choice, especially if you’re going into the kind of business where lawsuits are common.

If your business will have more than one owner, a sole proprietorship is no longer an option. Instead, your choices will be between an LLC, a partnership , an S corporation , or a C corporation .

Partnerships are less complex than LLCs. One type—a limited liability partnership (LLP) —does provide some liability protection to its owners, although less than an LLC in some states.

S corporations are another option. According to the SBA, corporations “offer the strongest protection to its owners from personal liability, but the cost to form a corporation is higher than other structures. Corporations also require more extensive record-keeping, operational processes, and reporting.” C corporations are more complex and tend to be very large companies.

What Is Better for Tax Purposes, a Sole Proprietorship or an LLC?

Sole proprietorships and LLCs are treated similarly for tax purposes. Both are considered pass-through or flow-through entities. This means that the business isn’t taxed on its income. Instead, the owners must account for any profits or losses on their personal tax returns. One exception is an LLC that has elected to be treated as a corporation; in that case, the business must pay tax on its profits before they are passed along to the owners, who are also subject to taxes on their share of them.

Can You Convert an LLC to a Sole Proprietorship?

Yes, you can convert an LLC into a sole proprietorship or a sole proprietorship into an LLC.

Do You Need a Physical Address for an LLC?

States require that you provide a valid street address (not a P.O. box) when you register as an LLC. This doesn’t mean that you must have a separate business address. If you are starting a business out of your home, you can file using your home address.

Where Should You Form Your LLC?

Many business owners find it most convenient to form their LLCs in the state where they live. However, you can choose any state you want to.

Starting a limited liability company (LLC) involves some extra paperwork and added costs compared with a sole proprietorship. However, the legal protections that an LLC provides may make that more than worthwhile for some business owners.

Wolters Kluwer. “ 12 Tips for Naming Your LLC or Corporation .”

U.S. Small Business Administration. “ Register Your Business .”

Wolters Kluwer. “ What Is a Registered Agent for an LLC or Corporation? ”

Wolters Kluwer. “ Corporation Formation Fees by State ,” select “Formation.”

Internal Revenue Service. “ How to Apply for an EIN .”

U.S. Small Business Administration. “ Apply for Licenses and Permits .”

U.S. Small Business Administration. “ Stay Legally Compliant .”

U.S. Small Business Administration. “ Choose a Business Structure .”

Wolters Kluwer. “ LLC vs. Partnership (GP, LP, and LLP): Which Business Structure Is the Best Choice for Multiple Business Owners? ”

Internal Revenue Service. “ LLC Filing as a Corporation or Partnership .”

CO- by U.S. Chamber of Commerce. “ How to Start an LLC .”

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Table of Contents

What is an LLC?

Pros and cons of an llc, types of llcs, how to form an llc.

A limited liability company (LLC) separates a company from its owners, protecting the owners from any financial losses, debts or legal liabilities that the business may incur.

An LLC is a business structure that combines the simplicity, flexibility and tax advantages of a partnership with the personal liability protection of a corporation. This type of structure “limits” the liability of its owners, called members.

Members can be individuals or other businesses. There is no limit to the number of members an LLC can have, and they can have as few as one member, called a single-member LLC.

LLCs are formed at the state level and aren't recognized as a tax structure by the federal government. An LLC may choose how it wants to be taxed — either as a C-corporation , S corporation , disregarded entity (the default for single-member LLCs) or a partnership (the default for multi-member LLCs). LLC members must apply to be taxed as corporations.

» MORE: LLC vs. corporation

LLC Formation

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LLC benefits

Structuring a business as an LLC offers several benefits.

Limited liability. Members’ personal assets — homes, cars, bank accounts, investments — are protected from creditors seeking to collect from the business.

Pass-through federal taxation on profits. Unless it opts otherwise, an LLC is a pass-through entity , meaning its profits go directly to its members without being taxed by the government on the company level. This makes filing taxes easier than if the business was taxed on the corporate level, and if the business loses money, members can shoulder the hit on their own tax returns and lower their tax burdens.

Management flexibility. Managers of an LLC can be either members or outsiders, allowing member-owners to be as involved in the management of their business as they want. In many states, an LLC is member-managed by default unless explicitly stated otherwise in filings with the secretary of state or the equivalent agency.

Easy startup and upkeep. Though it varies by state, the initial paperwork and fees for an LLC are relatively light. Ongoing requirements usually come on an annual basis.

» MORE: Best LLC business loans

LLC disadvantages

Before registering a business as an LLC, consider these possible drawbacks.

Limited liability has limits. A judge can rule that an LLC structure doesn’t protect your personal assets. The action is called “piercing the corporate veil,” and you can be at risk if, for example, you don’t clearly separate business transactions from personal transactions or if you run the business fraudulently in ways that cause losses for others.

Self-employment tax. If an LLC is taxed as a partnership, the government considers members who work for the business to be self-employed. This means those members are personally responsible for paying Social Security and Medicare taxes, which are collectively known as self-employment tax , based on the business’s total net earnings.

Consequences of member turnover. In many states, changes in membership require an LLC to be dissolved and reformed, which requires all the normal legal and financial obligations necessary to terminate and start a business. 

» MORE: Best business credit cards for LLCs

Single-member LLCs. Entities with one owner who is responsible for the taxes, operations and debt of the LLC. 

Multi-member LLCs. Entities with multiple members who share responsibility for the business, all of whom must sign the company’s operating agreement. 

Member-managed LLCs. Entities that are managed by the members. 

Manager-managed LLCs. Entities whose members hire an outside manager to run daily operations, rather than manage the business themselves. 

PLLCs. Entities whose professions are subject to state regulatory board licensing — such as CPAs, legal advisors or medical offices. 

» MORE: Member-managed LLCs vs. manager-managed LLCs

Choose a name

Register a unique name in the state where you plan to do business. To make sure someone else doesn’t have your business name, do a thorough search of online directories, county clerks’ offices and the secretary of state’s website in your state — and any others in which you plan to do business. For a fee, many states let applicants reserve an LLC name for a set period of time before filing articles of organization.

Choose a registered agent

A registered agent is a person you designate to receive official correspondence for the LLC. Choose a registered agent before filing your articles of organization; states generally require you to list a registered agent’s name and address on the form. Although people within the company usually can serve in this role, states maintain lists of third-party companies that perform registered-agent services.

File articles of organization

This step essentially brings your LLC into existence. States request basic pieces of information about your business, which, if you’ve thought through your business plan and structure, shouldn't be difficult to provide. You’ll also supply details such as a name, principal place of business and management type as part of filing your articles of organization .

Get an employer identification number

The IRS requires any business with employees or that operates as a corporation or partnership to have an EIN , which is a nine-digit number assigned to businesses for tax purposes. The rule applies to LLCs because for federal tax purposes they're either corporations or partnerships.

Draw up an operating agreement

Your LLC operating agreement should include specific information about your management structure, including an ownership breakdown, member voting rights, powers and duties of members and managers, and how profits and losses are distributed. Depending on the state, you can have either a written or oral agreement. Many states don’t require one, but they're useful to have.

Establish a business checking account

It’s generally good housekeeping to keep business and personal affairs separate. Having a separate business checking account draws a bright line between the two. This is critical if you want to mitigate any potential risk to your personal assets if a lawsuit calls into question your business practices.

» MORE: How to pay yourself as an LLC

Get insurance

Forming an LLC can help protect your personal assets from lawsuits. But getting LLC insurance will help protect your business assets, too.

Learn how to start your business

NerdWallet has rounded up some of our best information on starting a business , including structuring and naming your company, creating a solid plan and more.

LLC stands for limited liability company.

LLCs are a common type of business structure because they are relatively easy to form and protect owners from being liable for business losses or missteps. LLCs also allow for flexibility in the way they are managed — members can manage the daily operations of an LLC or they can hire an outside manager.

If an LLC’s members engage in certain types of misconduct, a judge may choose to hold them personally liable for the LLC’s actions. In addition to this risk, members may still be required to pay self-employment taxes and any membership changes require the entity to be completely dissolved and reformed.

On a similar note...

What Is A Limited Liability Company (LLC)? Definition, Pros & Cons

Updated: Jun 5, 2024, 4:41pm

An LLC, or limited liability company, provides business operators the protections usually only afforded to corporations and the simplicity often only available to sole proprietorships. LLCs offer legal protection of personal assets and pass-through taxation through a separate entity that isn’t limited to a specific number of shareholders or heavy regulation.

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What Is an LLC?

A limited liability company, or LLC, is a U.S. legal entity used to own, operate and protect a business. LLCs provide the same legal and financial protections corporations do but can be simpler to operate.

What Are the Benefits of an LLC?

Other common forms of businesses, including corporations, general partnerships and sole proprietorships, offer various benefits, but the LLC entity combines the advantages of each structure.

Asset Protection

The main advantage to an LLC is in the name: limited liability protection. Owners’ personal assets can be protected from business debts and lawsuits against the business when an owner uses an LLC to do business. An LLC can have one owner (known as a “member”) or many members. Businesses as well as individuals can be members of an LLC.

Taxation Options

LLCs also provide more flexibility than other business types as to how taxation functions. LLCs are automatically taxed as either a sole proprietorship or partnership, depending on whether there’s one member or multiple members. Members report their share of business income and expenses on their personal tax return and pay personal income tax on profits. Members who work in the business are considered self-employed and also must pay self-employment (Medicare and Social Security) taxes on their share of the profits.

If the entity wishes not to be taxed as a sole-proprietorship or partnership, the LLC can also elect to be taxed as an S-corp or C-corp. Corporate taxation allows LLC owners to be paid as company employees, participate in company benefit programs and potentially save on taxes. A C-corp pays corporate tax and its owners pay tax on distributions they receive. An S corp is a pass-through entity–it doesn’t pay corporate tax but each owner pays personal income tax on their share of the company’s profits. But not all LLCs qualify for S Corp . taxation–they must meet IRS requirements .

Versatility

LLCs are not required to have annual shareholder meetings or maintain a board of directors, nor are they bound by the administrative requirements often seen with corporations. Instead, an LLC’s members may organize how they like: Members or managers may manage the business’s operations as they see fit.

Legal Name and Credibility

State law usually doesn’t allow you to form a new business with the same name as an existing one. When you form an LLC, you gain the exclusive right to use your name as a business entity name in your state, and you also create a public record of your use of the name. The LLC moniker at the end of a company’s name can also lend credibility to a small business.

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Profit Sharing Flexibility

One advantage a multi-member LLC has is the ability for members to decide how to share profits. Corporations issue dividends on stock according to the number of shares owned, and partnerships normally split profits among partners, but an LLC can elect how its profits are shared, not shared or otherwise distributed. Beware, however, that IRS rules about special allocation of profits may require profit sharing to reflect ownership percentages or legitimate economic need or circumstance—and not be some attempt to avoid paying taxes.

What Are the Disadvantages of an LLC?

The first major disadvantage to an LLC, especially for smaller businesses, is cost.

LLCs are formed and registered at the state level, so the process—and the associated fees—can vary slightly from place to place. Setting up an LLC may cost a few hundred dollars. Many states require LLCs to file annual reports and pay annual fees and taxes that can vary between $10 and $800 or more.

While LLCs have “members” who own the business, an LLC does not issue stock in the same way a corporation does. Membership in an LLC isn’t as easy to transfer from one party to another as corporate stock is. In the absence of a contrary provision in an LLC’s operating agreement, some states require an LLC to be dissolved any time there is a change in ownership. Because of this, many businesses find a corporation’s structure more friendly to outside investment. LLCs offer serious flexibility when it comes to how a business can organize, manage and run its affairs, but those businesses with major outside investment requirements may find another structure more conducive to those forms of funding.

Start A Limited Liability Company Online Today with ZenBusiness

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Should I Form an LLC?

Forming an LLC offers major benefits for most small to medium business owners. Registering and operating as an LLC will provide business owners legal protection for personal assets, credibility and a long list of other advantages usually only found spread throughout a number of other business structures.

LLC Formation Costs

LLC registration and filing costs vary by state, as do taxes levied on LLCs. Hiring a lawyer to form an LLC can often be pricey, but may be necessary for those businesses with more complicated structures or many members. In most states, it costs between $50 and $200 to start an LLC, but a few states have fees as high as $500. You’ll have additional costs if you hire someone to help you with the process or act as your registered agent.

LLC State Guides

• Connecticut
• Massachusetts
• Mississippi
• New Hampshire
• North Carolina
• North Dakota
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• West Virginia

Frequently Asked Questions About LLCs

What is a foreign limited liability company.

A foreign LLC simply refers to one that operates in a different state than the one it was formed in. This is especially common for businesses located in cities close to state lines, where they may want to expand across the border. Operating in multiple states may make the LLC obligated to register documentation, pay taxes, and obtain other licenses in each state. And since each state has its own laws for governing LLCs, the business must make sure they stay in compliance with all of them.

Do I need to hire a lawyer to register an LLC?

No. Filing and registering an LLC with any given state does not require an attorney. For more complicated business structures and those who want to ensure no mistakes are made, hiring a lawyer may be advisable. Generally, however, forming an LLC does not specifically require hiring a lawyer. If you do want legal assistance at an affordable rate, consider using one of the best LLC services .

Is an LLC the same thing as a corporation?

An LLC offers some benefits of a corporation and vice versa, but an LLC and a corporation are two different business entities and are not the same thing. Learn more about LLCs vs corporations to determine which structure is best for your business.

What kind of tax flexibility does an LLC provide?

LLCs can be taxed as sole proprietorships, partnerships, C corporations or S corporations. This choice allows members of an LLC to minimize their tax burden.

Is it possible to set up an LLC for free?

While the cost to register an LLC varies by state, there is a fee to register in every state. So, while there are some companies that advertise “free” LLC formation, what this really means is that the company will fill out the LLC paperwork for you for free. But again, you will still be responsible for the state’s filing fee.

Is an LLC different from having liability insurance?

An LLC is not a commercial liability insurance policy and does not offer the same benefits. While an LLC protects you from personal liability from most business debts, liability insurance can protect you in the event someone claims your business caused an injury or property damage. Liability insurance for a business is also advisable in addition to the legal protections personal assets may receive from an LLC business structure.

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A Limited Liability Company (LLC) is a business structure allowed by state statute. Each state may use different regulations, you should check with your state if you are interested in starting a Limited Liability Company.

Owners of an LLC are called members. Most states do not restrict ownership, so members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner.

A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.

Classifications

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”). Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation. For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity.

Effective date of election

An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form 8832, Entity Classification Election PDF , to elect how it will be classified for federal tax purposes. Generally, an election specifying an LLC’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than 12 months after the date the election is filed. An LLC may be eligible for late election relief in certain circumstances. See About Form 8832, Entity Classification Election for more information.

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When Should a Business Become an LLC?

Last Updated: May 31, 2024, 8:44 am by TRUiC Team

Becoming an LLC is the next step in growing your business and protecting your assets. 

We will give you complete instructions to forming an LLC  and for transferring your EIN and DBA,  if needed .

Learn how to take this step in our When Should a Business Become an LLC  guide below.

Recommended:  ZenBusiness will form your LLC for $39 (plus state fees).

When to Convert A Business From A Sole Proprietorship To An LLC

It is time to go from a sole proprietorship to an LLC when you are serious about growing your business and earning a profit.

Sole proprietorships are only good for very low-profit/low-risk businesses. 

Example:  A sole proprietorship can be a good way to start out if you are doing business on a small scale or want to try out a low-risk venture to see how successful it will be.

Forming an LLC  allows business owners to grow their businesses and take on risk. This is because LLCs provide personal liability protection.

What is personal liability protection?  When a business owner has personal liability protection, they can’t be held personally responsible if the business suffers a loss. This means personal assets (car, house, and bank account) are protected.

If your business already earns a profit or if it carries any risk of liability, you should start an LLC immediately.

Why You Should Form an LLC

There are several benefits to starting an LLC that may or may not matter to a business owner.  But, regardless of any other factor, a business owner needs to form an LLC when they start to earn a profit or carry risk.

This is because profit and risk open the door to liability. A sole proprietor's personal assets are completely exposed to creditors and lawsuits because legally, the sole proprietor is the business. In an LLC, the business can be legally separate from the business owner. 

By changing your business from a sole proprietor to LLC you will:

• Protect your savings, car, and house
• Increase your peace of mind
• Protect your privacy
• Increase business growth
• Allow for greater profit
• Allow for accelerated growth
• Increase credibility

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Ready to Form an LLC?

Use our Form an LLC guide to get started. Follow this link and then choose your state for step-by-step instructions.

Steps To Convert Your Business To An LLC

When you form your LLC, you will need to complete these steps:

• Name Your LLC
• Choose an LLC Registered Agent
• File Your LLC's Articles of Organization
• Create an LLC Operating Agreement

You can start an LLC yourself using our free  Form an LLC  guide or you can use an  LLC formation  service to register your LLC for you.

Step 1: Name Your LLC

You will need to provide your state with a unique name that is distinguishable from all registered names when you file your LLCs formation documents. 

Our  Business Name Generator  and our  How to Name a Business  guide are free tools available to entrepreneurs that need help naming their business.

DBA Transfer

You may already have a DBA name for your sole proprietorship (or partnership) that you will want to carry over to your new LLC. The steps for transferring or converting a DBA name vary from state to state.

We recommend selecting your state on our  Form an LLC guide to learn more about searching and registering your business name.

You may also need to contact your state for specific directions on how to transfer your DBA registration. You can find your state's contact information on our guides.

Step 2: Choose an LLC Registered Agent

Your LLC  registered agent  will accept legal documents and tax notices on your LLC's behalf. You will list your registered agent when you file your LLC's Articles of Organization.

Step 3: File Your LLC's Articles of Organization

The  Articles of Organization , also known as a Certificate of Formation or a Certificate of Organization in some states, is the document you will file to officially register an LLC with the state.

Step 4: Create an LLC Operating Agreement

An  LLC operating agreement  is a legal document that outlines the ownership and member duties of your LLC.

Step 5: Get a New EIN or 'Transfer Existing EIN

An Employer Identification Number (EIN) is a number that is used by the US Internal Revenue Service (IRS) to identify and tax businesses. It is essentially a Social Security number for a business.

EINs are free when you apply directly with the IRS. Visit our  EIN  guide for instructions for getting your free EIN.

Transfer an EIN

According to the IRS , sole proprietors that incorporate (eg., form an LLC or corporation in IRS language), must get a new EIN. 

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LLC Business Plan Template: Everything You Need to Know

An LLC business plan template is an outline that helps you form a business plan for your limited liability company. 3 min read updated on November 02, 2020

What is a Business Plan?

An LLC business plan template is an outline that helps you form a business plan for your limited liability company. A business plan is a document that sets out an LLC’s goals and how they are to be achieved. This outline should encompass several aspects of an LLC’s agenda and can also be used as a guide for decision making or as a business proposal to show investors. Either way, having a business plan will give you the confidence to advance with your enterprise in a meaningful way.

Who Needs a Business Plan?

A business plan can be useful to you whether you are just starting out or already have a business, or whether you are a sole proprietor, an LLC member , or any other kind of business director. A plan will help you map out strategies for the company, build a framework for a present or future enterprise, and set out goals in your business.

In the end, whether you wish to start an LLC , go from freelance to small business owner, or improve and organize your already existing business, a business plan can help you do it, as well as show others what you intend to do and how you intend to do it.

How Long Should a Business Plan Be?

How long your business plan is will depend on your LLC size and what you intend the plan to be for; the plan can be as long or short as you need it to be.

That said, the more detailed your plan is, the more helpful it may be, since a detailed plan will indicate a clear strategy for you to follow in your endeavors rather than vague notions that give little sense of clear direction.

Also, if you intend to use your business plan to attract investors, the more detailed it is, the better.

How to Write a Business Plan with a Template

The best way to go about writing a business plan is to break it down into smaller elements by subject and intent and then take each one individually. Or, that is to say, you should take a template approach to writing your business plan, thereby making the task less daunting. A standard template for a business plan is as follows:

• Cover Page. In this you should offer a simple description of your business and its activities.
• Contents Page. This sets out what is to come and lets potential investors, partners, and lenders easily navigate through your plan.
• Executive Summary. This offers an overview of your business plan, outlining the steps to be taken to achieve your goals.
• Business Background. This highlights your experience and skills and gives a short summary of your LLC’s ownership, history, and mission statement.
• Marketing Plan. This will describe the services or products you intend to offer, as well as the pricing and marketing strategy you will pursue to sell them.
• Action Plan. This outlines the specific actions you will take to deliver your services and/or products to the customer.
• Financial Management, Statements, and Projections. This sets out where your startup capital will come from, what your monthly budget will be, what expenditures you anticipate, what return on investment (ROI) you expect, and what accounting strategies you will use.
• Operations. This describes your hiring processes and your anticipated costs for equipment, leasing, and insurance.
• Closing statement. This simply restates your goals for your business enterprise.
• Appendix. This can include sample marketing material, resumes, statistical analyses, and any other relevant data.

Updating Your Business Plan

Your business plan should not be an inflexible guide but rather a working document that you can consistently look to and revise as your business situation or goals change. Whether this is once a year, once a quarter, or just as you see fit, that is up to you. What is important is to be willing to adjust the plan as needed so that it always is reflective of the current and future direction of your business.

Periodically updating your plan can also help your company and its employees remain focused on the proper goals and perhaps even give you and your business a new sense of purpose as milestones are achieved and new ones are realized.

If you need help creating an LLC business plan template, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

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What is an LLC operating agreement, and do I need one for my LLC? A guide for new business owners about the purpose, pros, and cons of an LLC operating agreement and the process of setting one up

Starting a new small business can be an exciting — and intimidating — endeavor, and it is vital to set the stage correctly. For many small business owners, that means forming an LLC and creating an operating agreement to avoid personal liability, legal burdens, and financial obligations.

This article provides basic information about operating agreements and answers some commonly asked questions to help you decide if your LLC needs an operating agreement.

Operating agreement definition

An operating agreement is a basic legal document agreed to when someone forms a limited liability company (LLC). At a high level, it sets forth the structure, management, decision-making process, and operating procedures for an LLC. An operating agreement is invaluable in laying out how the LLC is arranged, how it will be run, and how it goes about its work. Essentially, an operating agreement is a contract; once signed, the LLC members are bound by its terms.

What is included?

Operating agreements spell out a company’s operational and financial rules and provisions. Think of them as a how-to guide for how the business should be operated and managed. Specifically, an operating agreement should include:

• Portion of members’ ownership, often expressed as ownership percentages
• Powers and duties of managers and members
• Distribution of losses and profits
• Member duties and member benefits
• How board member meetings will be held
• How new members are to be admitted
• Voting rights
• Buyout and sellout processes — ownership transitions
• Tax considerations
• Transfer provisions

These are the basic components of an operating agreement. It does not have to spell out everything step-by-step, but the more comprehensive and specific it is, the better it is. One thing to remember here is that a key benefit of an operating agreement is its interplay between providing formal structure while simultaneously leaving room for flexibility so that it functions well for a specific LLC. That being said, these key elements will be present in any well-drafted operating agreement.

What are the pros and cons?

The major pros of an operating agreement are that it protects an LLC’s members from the liabilities of the LLC itself, enhances clarity in how the organization is structured and run, and provides flexibility in that it can be adapted to a specific LLC.

The cons of an LLC are far less significant and include expense, increased formality, and greater administrative duties. Most would agree that operating agreements have considerable upside and minimal downside.

The main benefits of having an operating agreement for your LLC include:

• Shielding LLC members from liability. With no operating agreement in place, there is a risk that the organization could resemble a sole proprietorship. The danger here is that the owner of a sole proprietorship does not enjoy the protections that stem from the organization being recognized as a distinct legal entity and so could be held liable for obligations incurred by the organization. That may mean a business owner’s personal assets are at risk of being used to satisfy the organization’s debts.
• Establishing clarity. With an operating agreement in place, everyone knows the rules, which can make day-to-day and significant decisions easier to make. It can also reduce the chances of dispute later in the LLC’s life.
• Providing room for customization. An operating agreement can be tailored to the specific needs of an LLC. It is not a one-size-fits-all document that an LLC must contort itself to comply with; rather, it can be adapted as the needs of the LLC dictate.
• Averting default rules. Without a signed LLC agreement in place, there is a chance your state’s default rules will govern your organization. This opens you, the business owner, up to risk — this stage of getting your business up and running should be all about minimizing risk and setting yourself up for success.

There are very few downsides to having an operating agreement for your LLC, and anyone would be hard pressed to argue that they outweigh the upsides. Even so, it is essential to recognize that the very few drawbacks to having an operating agreement would include:

• Creating extra expense. Developing and implementing an operating agreement does require an outlay of at least some capital, although the pricing can vary and is often considered money well spent.
• Crushing entrepreneurial spirit. Sometimes, there can be some resistance to operating agreements in the heady early days of a startup because some hard-charging entrepreneurs balk at the idea of formality or added structure. Implementing an operating agreement can feel like a step toward stodgy conventionality. Handshake and verbal agreements are no substitute for written operating agreements, however. Even if it goes against the grain of company culture, an operating agreement is still a good idea.
• Increasing formality. The formalities and requirements of an operating agreement may generate a little resistance from LLC members, and updating or amending it takes further effort and possibly capital outlay. It bears repeating that the benefits of an operating agreement most likely make this a price worth paying.

Few people would even try to argue that any possible downside to a written operating agreement would amount to sufficient reason for your LLC not to have one. However, an operating agreement is not the only formation document a business owner should know. Certificates of formation are another vital document, as are bylaws — even though they are for corporations and not LLCs.

Is an operating agreement the same as bylaws?

No, operating agreements and corporate bylaws are not the same. While there are parallels between these two types of documents, they govern different kinds of organizations and pertain to different aspects of running the organization.

• Operating agreements are an instrument for LLCs and focus primarily on ownership, management, and financial matters.
• Bylaws are rules and regulations that govern corporations’ internal operations and management, including non-profit corporations. They spell out how the organization will undergo its affairs; make decisions; and engage with its members, shareholders, and board of directors. Bylaws are more rigid than operating agreements and are usually not filed with a government entity or made public, although some jurisdictions require them to be kept at the principal place of business and be made available to shareholders or regulators.

Is an operating agreement the same as a certificate of formation?

An operating agreement is not the same thing as a certificate of formation. A certificate of formation — sometimes called a certificate of incorporation or articles of organization — is a simple legal document required to be filed with the appropriate state agency, usually the secretary of state, upon LLC formation.

A certificate of formation usually contains basic information like business name, business purpose, management structure, amount and type of stock, principal office, and registered agent . This designated person can receive legal documents on behalf of the LLC. Certificates of formation are where you would specify whether you have a member-managed or manager-managed LLC. States require these to know who is doing what kind of business and who is responsible for that business’ affairs.

The main differences here are that a certificate of formation is a legal requirement and a public document. In contrast, an operating agreement is not a legal requirement and, as an internal document, is not public.

How to know if you need an operating agreement for an LLC

Operating agreements are not necessarily needed or legally required for setting up or operating an LLC. Some states require LLCs to have a written operating agreement, including California, Delaware, Maine, Missouri, and New York. Since California, Delaware, and New York are three of the most important business states in the country, this signals that written operating agreements have great value. However, before you — the business owner — start making business expenses, hiring staff, and marketing your product or service, you should have your operating agreement in place. Here is why:

• Enhanced clarity. An operating agreement for an LLC provides clarity for everyone involved. It usually does not spell out every right and responsibility, but it does not have to. Providing a robust, overall look at who does what and why gives all parties a strong, foundational understanding of what is expected of them and what privileges they may enjoy.
• Reduced potential for friction. If an LLC has more than one owner, the operating agreement serves as a neutral point of reference that can reduce the possibility of friction further down the line. By setting out basic governing principles, the agreement can help co-owners conform their conduct to what is expected of them and reduce the potential of a dispute.
• Increased liability protection. Operating agreements reinforce the limited liability protection of an LLC. Because they delineate the LLC as a separate legal entity and define its adherence to corporate formalities, they can protect members from personal liability for the LLC’s legal obligations and debts.

The best time to create and implement an operating agreement is when you form the LLC because you want to clarify everything at the outset. While it is possible in many jurisdictions to create an operating agreement at any point during the life of the LLC , it is hard to formally capture and memorialize everything that has happened to date and, once again, having operating procedures set in place from the get-go makes running the business easier. That is less true if there is a period without an operating agreement and a period after an operating agreement has been put in place.

Single-member LLCs

There are single-member LLCs and multiple-member LLCs . While it may seem like your single-member LLC should be a simpler affair than a multi-member LLC, all of the advantages of having an operating agreement — protection from liabilities, clarity, and flexibility — still apply. Remember, if you have chosen to be a single-member LLC, there is a reason you went that route instead of forming as a sole proprietorship. Do not risk being seen as a sole proprietorship by having no operating agreement.

Formal steps recommended to set up an operating agreement

It may be useful to discuss what degree of formality is required in an operating agreement.

• Do operating agreements need to be notarized? In most jurisdictions, it is not a legal requirement that an operating agreement be notarized. However, having a document notarized is neither difficult nor expensive, so it may be a good idea.
• Do operating agreements need to be filed with the state? No. In most jurisdictions, it is not a requirement that operating agreements be filed with the state — but certificates of formation or articles of incorporation do need to be filed with the state.
• Are operating agreements public record? No, operating agreements are not public record. They are an internal governance document that does not need to be filed with anyone. In fact, the U.S. Small Business Administration recommends they be kept confidential.

Creating an operating agreement for an LLC

Operating agreements can be created in a number of different ways:

• You write your own operating agreement. It takes knowledge of business law in your relevant jurisdiction and experience drafting operating agreements to prepare a good one. To make it easier, there are software programs that provide multiple variations of operating agreements — drafted by attorneys — that can be customized to your specific needs. Regardless, the final version should be reviewed by a lawyer.
• You hire a lawyer to create an operating agreement. Given the risk of getting into financial and legal trouble, it would be money well spent to hire a lawyer. It is not very expensive and might take two to three hours to draft a simple agreement.
• You use an operating agreement template. Template examples of operating agreements can sometimes be found on websites for secretaries of state, and many small business resource centers or business schools have templates available.

5 easy steps to set up an LLC operating agreement

If you have decided that an operating agreement is a good fit for your LLC, here are five steps you must follow to set it up:

• Learn your jurisdiction’s requirements. Operating agreements are largely a creature of state law, so you must understand what — if any — state-specific requirements apply to your operating agreement. There may not be any, but it’s better to know for sure.
• Gather need-to-know information. First, you must collect essential details about your LLC, such as who the owners are, their initial contribution, and what percentage each owns.
• Create a blueprint of structure and rules. Next, you should define your LLC's ownership and management structure, spell out profit allocation, delineate decision-making procedures, and list management responsibilities.
• Address key provisions. Your operating agreement should address matters like capital contributions, profit distribution, the process for adding and removing members, dispute resolution, and dissolution procedures. Remember, the point of an operating agreement is to establish the rules of the game, so to speak, so you want to make sure your operating agreement speaks to the most significant issues your LLC will face during its lifespan.
• Sign and keep copies. Once your operating agreement has been drafted, have all the members review and sign it. Notarization is not a legal requirement in most jurisdictions, but is a good idea. Keep copies on hand for ease of reference and legal protection.

Bear in mind that a major advantage of operating agreements is that they are flexible documents that can be adapted to suit the specifics of your LLC, so the five steps above are general and not comprehensive.

Ideally, this article has given you a good understanding of what operating agreements are, why they are useful, and why having one for your LLC is almost certainly a good option. When you are getting a new business off the ground, it is quite easy to mentally skip ahead to a time when your LLC is flourishing. You have to establish a solid foundation before you can get to that stage, though.

Having an operating agreement in place will protect you from personal liability and the financial obligations of your organization, keep relationships with other members smooth and professional, and help guide your LCC from its starting point to success.

Additional LLC operating agreement resources

Practical Law’s startups and small businesses collection has material you may find useful to support your business at every stage, including insights on hiring, funding, and scaling your business.

An LLC Operating Agreement Checklist is a checklist compiling questions to consider before preparing a comprehensive limited liability company agreement.

LLC Operating Agreements Line by Line  is a book with a comprehensive explanation of the material provisions and issues that arise among limited liability company members when preparing or amending an operating agreement.

Structuring and Drafting Partnership and LLC Agreements, Fourth Edition   is a book that provides expert guidance on every aspect of crafting tax-driven agreements associated with partnerships and LLCs.

Limited Liability Companies: Law, Practice, and Forms, 2d is a book with CDROM that optimizes the flexibility and tax advantages of limited liability companies and helps analyze planning issues.

Related insights

Legal writing

Signed, sealed, delivered: What does this mean?

Contracts and intellectual property ownership

Serving startups and small businesses

Check out multiple versions of Practical Law operating agreements, including agreements for single-member, joint-venture, and multi-member LLCs 

Why You Should Form an LLC

There are several ways of organizing your business. One of the more popular forms is the limited liability company, or LLC. Learn why this form is popular, and get some guidance in determining if an LLC may be right for your business.

Ready to start your business? Plans start at $0 + filing fees.

by   Edward A. Haman, Esq.

Edward A. Haman is a freelance writer, who is the author of numerous self-help legal books. He has practiced law in H...

Read more...

Updated on: July 11, 2024 · 3 min read

What is an LLC?

Do i need an llc to start a business, why would you need an llc, forming an llc.

Although a limited liability company, or LLC, isn't for every business owner, there may be good reasons why you should form an LLC. The following information will help you determine if an LLC is right for your business.

A limited liability company (LLC) is a type of business organization allowed by state law. The LLC was mainly created to limit the personal liability of the owners (like a corporation), but also to allow the business to be taxed like a partnership. LLC owners are called members (comparable to shareholders in a corporation).

The members select managers, who run the day-to-day operation of the business (comparable to corporate directors and officers). Of course, in a small LLC, the members and managers may be the same person or people.

It is not necessary to form an LLC in order to start a business. An LLC is only one of several ways of organizing a business. Other possibilities include:

• Sole proprietorship . This is where a single person is the owner of the business. The owner does not have any protection from personal liability for business debts.
• General partnership . This is the simplest arrangement where two or more people own a business. The partners do not have any protection from personal liability for business debts, or for actions of the other partners taken within the scope of the business.
• Limited partnership . A limited partnership has two types of owners: general partners (who operate the business, make the decisions, and have personal liability), and limited partners (who are basically investors who do not have the right to operate the business or make business decisions, and do not have personal liability for business debts).
• Corporation . In many ways similar to an LLC, a corporation is owned by the investors (called shareholders or stockholders ), who provide the funds, assets, or services used to operate the business. The shareholders elect a board of directors , who are primarily responsible for major business decisions. The board of directors also selects officers , who are responsible for the day-to-day operation of the business. In a small corporation, the shareholders may also be the directors and officers.

Depending upon the state where your business operates, and the type of business you have, you might also be able to organize as a limited liability partnership (LLP) or a limited liability limited partnership (LLLP), which afford some limited liability to the general partners; or a professional association (PA), which is only available to those engaged in certain types of professions.

Whether you are about to start a business or have been operating as a sole proprietor or a partnership, you probably want to know: How do I know if I need an LLC?

When choosing the form of your business, numerous considerations come into play, including personal liability, ownership, and management, cost of forming and registering the business, and taxation. Reasons you might want an LLC include:

• Limiting your personal liability for business debts . With an LLC, only the assets owned in the name of the LLC are subject to the claims of business creditors, including lawsuits against the business. The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC.
• Raising capital from investors . This can be done by bringing in other members who contribute funds, property, or services to the business.
• Tax advantages . There is usually no separate tax levied on the LLC itself, as there may be with a corporation. LLC profits or losses are generally passed on to the members, as they would be with a partnership.

You should also compare your state's fees associated with both LLCs and corporations, to see if one or the other is less expensive to form and maintain. Also, you should consider what your state requires in the way of holding meetings of the members, and annual reporting.

The details of forming an LLC vary from state to state. Generally, you would create an LLC operating agreement  setting forth the rights and duties of the members and managers (similar to articles of incorporation), file certain forms with the appropriate state agency (often the secretary of state), and pay a filing fee.

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Money blog: Oasis resale U-turn as official reseller lowers fee amid criticism

The Money blog is your place for consumer and personal finance news and tips. Today's posts include Twickets lowering fees for Oasis tickets, the extension of the Household Support Fund and O2 Priority axing free Greggs. Listen to a Daily podcast on the Oasis ticket troubles as you scroll.

Monday 2 September 2024 20:11, UK

• Oasis resale U-turn as Twickets lowers fee after criticism
• Millions to get cost of living payments this winter as scheme extended
• O2 Priority customers fume as Greggs perk scaled back
• Listen to the Daily above and tap here to follow wherever you get your podcasts

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Twickets has announced it is lowering its charges after some Oasis fans had to pay more than £100 in extra fees to buy official resale tickets.

The site is where the band themselves is directing people to buy second-hand tickets for face value - having warned people against unofficial third party sellers like StubHub and Viagogo.

One person branded the extra fees "ridiculous" (see more in 10.10 post), after many people had already been left disappointed at the weekend when Ticketmaster's dynamic pricing pushed tickets up by three times the original advertised fee.

Twickets said earlier that it typically charged a fee of 10-15% of the face value of the tickets.

But it has since said it will lower the charge due to "exceptional demand" from Oasis fans - taking ownership of an issue in a way fans will hope others follow. 

Richard Davies, Twickets founder, told the Money blog: "Due to the exceptional demand for the Oasis tour in 2025, Twickets have taken the decision to lower our booking fee to 10% and a 1% transactional fee (to cover bank charges) for all buyers of their tickets on our platform. In addition we have introduced a fee cap of £25 per ticket for these shows. Sellers of tickets already sell free of any Twickets charge.

"This ensures that Twickets remains hugely competitive against the secondary market, including sites such as Viagogo, Gigsberg and StubHub.

"Not only do these platforms inflate ticket prices way beyond their original face value but they also charge excessive booking fees, usually in the region of 30-40%. Twickets by comparison charges an average fee of around 12.5%"

The fee cap, which the Money blog understands is being implemented today, will apply to anyone who has already bought resale tickets through the site.

Mr Davies said Twickets was a "fan first" resale site and a "safe and affordable place" for people to trade unwanted tickets.

"The face value of a ticket is the total amount it was first purchased for, including any booking fee. Twickets does not set the face value price, that is determined by the event and the original ticketing company. The price listed on our platform is set by the seller, however no one is permitted to sell above the face-value on Twickets, and every ticket is checked before listing that it complies with this policy," he said.

Meanwhile, hundreds of people have complained to the regulator about how Oasis tickets were advertised ahead of going on sale. 

The Advertising Standards Authority said it had received 450 complaints about Ticketmaster adverts for the gigs.

Some  expressed their anger on social media , as tickets worth £148 were being sold for £355 on the site within hours of release, due to the "dynamic pricing" systems.

A spokesperson from ASA said the complainants argue that the adverts made "misleading claims about availability and pricing".

They added: "We're carefully assessing these complaints and, as such, can't comment any further at this time.

"To emphasise, we are not currently investigating these ads."

Ticketmaster said it does not set prices and its website says this is down to the "event organiser" who "has priced these tickets according to their market value".

Despite traditionally being an affordable staple of British cuisine, the average price for a portion of fish and chips has risen by more than 50% in the past five years to nearly £10, according to the Office for National Statistics.

Sonny and Shane "the codfather" Lee told Sky News of the challenges that owning J-Henry's Fish and Chip Shop brings and why prices have skyrocketed. 

"Potatoes, fish, utilities, cooking oil - so many things [are going up]," he said. 

Shane also said that he is used to one thing at a time increasing in price, but the outlook today sees multiple costs going up all at once.  

"Potatoes [were] priced right up to about £25 a bag - the previous year it was about £10 a bag," Sonny said, noting a bad harvest last year. 

He said the business had tried hake as a cheaper fish option, but that consumers continued to prefer the more traditional, but expensive, cod and haddock. 

"It's hard and we can we can absorb the cost to a certain extent, but some of it has to be passed on," Shane added. 

After a long Saturday for millions of Oasis fans in online queues, the culture secretary says surge pricing - which pushed the price of some tickets up by three times their original advertised value to nearly £400 - will be part of the government's review of the ticket market. 

On today's episode of the Daily podcast, host Niall Paterson speaks to secondary ticketing site Viagogo. While it wasn’t part of dynamic pricing, it has offered resale tickets for thousands of pounds since Saturday. 

Matt Drew from the company accepts the industry needs a full review, while Adam Webb, from the campaign group FanFair Alliance, explains the changes it would like to see.

We've covered the fallout of the Oasis sale extensively in the Money blog today - see the culture secretary's comments on the "utterly depressing" inflated pricing in our post at 6.37am, and Twickets, the official Oasis resale site, slammed by angry fans for its "ridiculous" added fees at 10.10am.

The growing backlash culminated in action from Twickets - the company said it would lower its charges after some fans had to pay more than £100 in extra fees for resale tickets (see post at 15.47).

Tap here to follow the Daily podcast - 20 minutes on the biggest stories every day

Last week we reported that employers will have to offer flexible working hours - including a four-day week - to all workers under new government plans.

To receive their full pay, employees would still have to work their full hours but compressed into a shorter working week - something some workplaces already do.

Currently, employees can request flexible hours as soon as they start at a company but employers are not legally obliged to agree.

The Labour government now wants to make it so employers have to offer flexible hours from day one, except where it is "not reasonably feasible".

You can read more of the details in this report by our politics team:

But what does the public think about this? We asked our followers on LinkedIn to give their thoughts in an unofficial poll.

It revealed that the overwhelming majority of people support the idea to compress the normal week's hours into fewer days - some 83% of followers said they'd choose this option over a standard five-day week.

But despite the poll showing a clear preference for a compressed week, our followers appeared divided in the comments.

"There's going to be a huge brain-drain as people move away from companies who refuse to adapt with the times and implement a 4 working week. This will be a HUGE carrot for many orgs," said Paul Burrows, principal software solutions manager at Reality Capture.

Louise McCudden, head of external affairs at MSI Reproductive Choices, said she wasn't surprised at the amount of people choosing longer hours over fewer days as "a lot of people" are working extra hours on a regular basis anyway.

But illustrator and administrative professional Leslie McGregor noted the plan wouldn't be possible in "quite a few industries and quite a few roles, especially jobs that are customer centric and require 'round the clock service' and are heavily reliant upon people in trades, maintenance, supply and transport". 

"Very wishful thinking," she said.

Paul Williamson had a similar view. He said: "I'd love to know how any customer first service business is going to manage this."

We reported earlier that anyone with O2 Priority will have their free weekly Greggs treats replaced by £1 monthly Greggs treats - see 6.21am post.

But did you know there are loads of other ways to get food from the nation's most popular takeaway for free or at a discount?

Downloading the Greggs app is a good place to start - as the bakery lists freebies, discounts and special offers there regularly. 

New users also get rewards just for signing up, so it's worth checking out. 

And there's a digital loyalty card which you can add virtual "stamps" to with each purchase to unlock discounts or other freebies.  

Vodafone rewards

Seriously begrudged Virgin Media O2 customers may want to consider switching providers. 

The Vodafone Rewards app, VeryMe, sometimes gives away free Greggs coffees, sausage rolls, sweet treats and more to customers.

Monzo bank account holders can grab a sausage roll (regular or vegan), regular sized hot drink, doughnut or muffin every week. 

Birthday cake

Again, you'll need the Greggs award app for this one - which will allow you to claim one free cupcake, cream cake or doughnut for your birthday each year.

Octopus customers

Octopus Energy customers with smart meters can claim one free drink each week, in-store from Greggs (or Caffè Nero).

The Greggs freebie must be a regular size hot drink.

Make new friends

If you're outgoing (and hungry), it may be worth befriending a Greggs staff member.

The staff discount at Greggs is 50% on own-produced goods and 25% off branded products. 

If you aren't already aware, Iceland offers four Greggs sausage rolls in a multi-pack for £3. 

That means, if you're happy to bake it yourself, you'll only be paying 74p per sausage roll. 

Millions of Britons could receive extra cash to help with the cost of living this winter after the government extended the Household Support Fund.

A £421m pot will be given to local councils in England to distribute, while £79m will go to the devolved administrations.

The fund will now be available until April 2025 having been due to run out this autumn.

Councils decide how to dish out their share of the fund but it's often via cash grants or vouchers.

Many councils also use the cash to work with local charities and community groups to provide residents with key appliances, school uniforms, cookery classes and items to improve energy efficiency in the home.

Chancellor Rachel Reeves said: "The £22bn blackhole inherited from the previous governments means we have to take tough decisions to fix the foundations of our economy.

"But extending the Household Support Fund is the right thing to do - provide targeted support for those who need it most as we head into the winter months."

The government has been criticised for withdrawing universal winter fuel payments for pensioners of up to £300 this winter - with people now needing to be in receipt of certain means-tested benefits to qualify.

People should contact their local council for details on how to apply for the Household Support Fund - they can find their council  here .

Lloyds Bank app appears to have gone down for many, with users unable to see their transactions. 

Down Detector, which monitors site outages, has seen more than 600 reports this morning.

It appears to be affecting online banking as well as the app.

There have been some suggestions the apparent issue could be due to an update.

Another disgruntled user said: "Absolutely disgusting!! I have an important payment to make and my banking is down. There was no warning given prior to this? Is it a regular maintenance? Impossible to get hold of someone to find out."

A Lloyds Bank spokesperson told Sky News: "We know some of our customers are having issues viewing their recent transactions and our app may be running slower than usual.

"We're sorry about this and we're working to have everything back to normal soon."

We had anger of unofficial resale prices, then Ticketmaster's dynamic pricing - and now fees on the official resale website are causing consternation among Oasis fans.

The band has encouraged anyone wanting resale tickets to buy them at face value from Ticketmaster or Twickets - after some appeared for £6,000 or more on other sites.

"Tickets appearing on other secondary ticketing sites are either counterfeit or will be cancelled by the promoters," Oasis said.

With that in mind, fans flocked to buy resale tickets from the sites mentioned above - only to find further fees are being added on. 

Mainly Oasis, a fan page, shared one image showing a Twickets fee for two tickets as high as £138.74. 

"Selling the in demand tickets completely goes against the whole point of their company too… never mind adding a ridiculous fee on top of that," the page shared. 

Fan Brad Mains shared a photo showing two tickets priced at £337.50 each (face value of around £150, but increased due to dynamic pricing on Saturday) - supplemented by a £101.24 Twickets fee. 

That left him with a grand total of £776.24 to pay for two tickets.

"Actually ridiculous this," he  said on X .

"Ticketmaster inflated price then sold for 'face value' on Twickets with a £100 fee. 2 x £150 face value tickets for £776, [this] should be illegal," he added. 

Twickets typically charges between 10-15% of the ticket value as its own fee. 

We have approached the company for comment.

Separately, the government is now looking at the practice of dynamic pricing - and we've had a response to that from the Competition and Markets Authority this morning.

It said: "We want fans to get a fair deal when they go to buy tickets on the secondary market and have already taken action against major resale websites to ensure consumer law is being followed properly. 

"But we think more protections are needed for consumers here, so it is positive that the government wants to address this. We now look forward to working with them to get the best outcomes for fans and fair-playing businesses."

Consumer protection law does not ban dynamic pricing and it is a widely used practice. However, the law also states that businesses should not mislead consumers about the price they must pay for a product, either by providing false or deceptive information or by leaving out important information or providing it too late.

By James Sillars , business reporter

It's a false start to the end of the summer holidays in the City.

While London is mostly back at work, trading is fairly subdued due to the US Labor (that's labour, as in work) Day holiday.

US markets will not open again until Tuesday.

There's little direction across Europe with the FTSE 100 trading nine points down at 8,365.

Leading the gainers was Rightmove - up 24%. The property search website is the subject of a possible cash and shares takeover offer by Australian rival REA.

The company is a division of Rupert Murdoch's News Corp.

One other point to note is the continuing fluctuation in oil prices.

Brent crude is 0.7% down at the start of the week at $76.

Dragging the cost lower is further evidence of weaker demand in China.

Australia's REA Group is considering a takeover of Rightmove, in a deal which could be worth about £4.36bn.

REA Group said in a statement this morning there are "clear similarities" between the companies, which have "highly aligned cultural values".

Rightmove is the UK's largest online property portal, while REA is Australia's largest property website. 

It employs more than 2,800 people and is majority-owned by Rupert Murdoch's News Corp,.

REA Group said: "REA sees a transformational opportunity to apply its globally leading capabilities and expertise to enhance customer and consumer value across the combined portfolio, and to create a global and diversified digital property company, with number one positions in Australia and the UK.

"There can be no certainty that an offer will be made, nor as to the terms on which any offer may be made."

Rightmove has been approached for comment.

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