How long does it take to set up an LLC?
If you’re planning to start your own business, you’ll have several business entity options to choose from. One of the most popular business entities is the LLC, or Limited Liability Company.
Generally speaking, it takes 2 to 3 weeks to start an LLC, depending on which state your business is located in and the type of business you’re operating. If you’re thinking about forming an LLC, the following outlines the LLC process so that you’ll have a better understanding of the timeline required to launch your new LLC venture and can get a jump on meeting and filing all of the necessary paperwork.
What is an LLC?
An LLC is a legal business entity that operates by a unique set of requirements and rules created under state law. An LLC must adhere to laws and regulations that differ from state to state.
LLCs are composed of one or more business owners—also known as members—which can be classified as other LLCs, foreign entities, individuals, or corporations. Only insurance companies and banks cannot be an owner of an LLC.
There are 2 main ways in which LLCs are structured during business formation:
- The member-managed LLC: An organizational structure where all LLC owners actively participate in the decision-making for the LLC.
- The manager-managed LLC: An organizational structure where an appointed manager handles all of the decision-making for the LLC.
By choosing an LLC, you’re selecting a business structure option that lets you decide how you want your company to be taxed—either as a sole proprietorship, a corporation, an S-corp, or a partnership. An LLC also separates you from your company and protects your personal assets in the event of a lawsuit or if your company owes debts.
Steps to set up an LLC
The steps for setting up an LLC can be broken down into 6 easy steps:
1) Check if your business name is available
Here you’ll want to choose a name for your LLC. You’ll need to make sure the name is available in your state, and you can verify the name’s availability by conducting a name search on your state’s Secretary of State website. Additionally, you’ll need to ensure that your LLC name meets the specific naming requirements for your state.
2) Claim your name
Before you can claim your name, you’ll want to appoint a registered agent to handle all of the legal and official government paperwork for your LLC. The registered agent can be an individual or a company, such as a registered agent service. For single-member LLCs, you can even appoint yourself. You’ll then need to lock in your business name by filing your LLC Articles of Organization with your state’s Secretary of State.
3) Write your operating agreement
An operating agreement is a legal document outlining your LLC's management and operating structure and is intended to protect all people who have a vested interest in the company. While writing your LLC operating agreement is optional in most states, it’s still good practice to do so, regardless of your state’s operating agreement requirement.
4) File your statement of information
The Statement of Information—also known as an annual report—is a document you’ll need to file for your LLC with most state agencies, which confirms your LLC is still active and has paid the annual state costs associated with keeping your LLC up and running. Along with filing your Statement of Information with your state’s Secretary of State, you’ll also need to pay a filing fee, the cost of which varies state to state and may include additional fees.
5) Pay your taxes
As a newly registered LLC, you’ll also want to register your business with the IRS, which is a requirement for LLCs to file federal tax returns in addition to any state filing. To do so, you’ll need to apply for a Federal Employer Identification Number—or Federal Tax Identification Number from the Internal Revenue Service, which is essentially a Social Security Number for businesses. You’ll then want to open a business bank account for your LLC to keep all of your work and personal transactions separate. To do so, you’ll need your Articles of Organization, your Federal Employer Identification Number, and a driver’s license.
6) Wrap up other regulation and sales tax requirements
If your LLC has employees, you’ll need to purchase worker’s compensation insurance. You’ll also want to check with your business accountant or business attorney to see if there are any other taxes you’ll need to pay or any specific business licenses or permits you’ll need to secure.
How long does it take to set up an LLC? A rough timeline
The turnaround time to set up an LLC in the United States varies depending on which state you’re operating from and the industry in which your LLC resides. The approval process takes anywhere between 14 and 21 business days for most states.
There are outliers to this range, as some LLC approval processing times can take as long as 6 weeks. On the shorter side, some states will approve your LLC after reviewing your LLC formation documents.
Another factor impacting your LLC’s approval timeline is how you submitted your formation documents. If you submit by mail, the process will most likely take longer than online filing or filing in person. Each year, there’s also a specific time period that is each state’s “busy season,” so submitting your formation documents during the busy window might delay your LLC approval.
One way to expedite your LLC approval process is to hire a business law firm or business attorney. Most business attorneys can help you finalize your LLC in around 3 business days. Depending on which state you’re registering your LLC in, you might even have an expedited service option directly with the state or can enlist the help of a filing service company, both of which should also help speed things along the formation process.
Finalizing the setup of your LLC
Congratulations! You’re now well on your way to running your own LLC. It makes sense to protect your new business entity with LLC insurance. While many LLC insurance options are available to you, heading over to Huckleberry is one of the easiest ways to set up LLC insurance coverage.
How to get LLC insurance
The process for obtaining LLC insurance is a breeze. Simply go to Huckelberry.com and select the “Instant Estimate” option. You’ll then get quotes for LLC insurance and other types of insurance coverage that are tailor-made to the needs of your specific operation.
While there are many insurance options for your LLC, the following are three of the most common types of insurance that could address most of your LLC’s needs:
- General Liability Insurance: This general policy offers a wide range of liability protection from potential lawsuits to you and your LLC.
- Professional Liability Insurance: Professional service providers such as consultants or accountants are the primary beneficiaries of this policy since it helps cover against different types of business errors and malpractice.
- Workers’ Compensation Insurance: Provides coverage to your employees in the event of illnesses, on-the-job injuries, or even death.
You may also want to consult your business accountant for legal advice on the other types of business insurance that might be relevant to your specific LLC’s operation.
Get LLC insurance in minutes by following these steps
Choosing the right business insurance for your LLC can be an overwhelming process, but it doesn’t have to be. That’s where Huckleberry can help.
Huckleberry is a quick and easy solution for all your business insurance needs, making purchasing business insurance simple. Here’s how you can get started:
1. Go to Huckleberry.com and choose the “Instant Estimate” option. We’ll then provide you with quotes for LLC insurance and other types of coverage designed to meet the needs of your specific LLC.
2. Input the type of work your LLC is involved in, which helps Huckleberry customize your insurance options.
3. Answer a few basic questions about the nature of your company, helping Huckleberry tailor its insurance option results to only those that can directly benefit your LLC.
4. After a few short minutes, you’ll receive a quote containing customized small business insurance options.
5. Don’t forget that the Huckleberry insurance cost calculator provides an accurate cost estimate for workers’ compensation insurance.
Round of applause! You’ve just learned how to launch your very own Limited Liability Company successfully. As a final step, don’t forget first to snag a quality business insurance policy to keep you, your assets, and the future of your LLC safe and protected.
For all things business insurance, Huckleberry has you covered and can provide you with various insurance quotes and policy options that will protect your LLC now and in the years to come.