After months of toying with the idea, you’ve decided to take the plunge and start a business, dive headfirst into the LLC ownership life.
As you prepare, keep in mind that where you form your LLC is important, as it dictates certain startup procedures. Someday your business might span coast to coast, but for now, it’s important to understand the differences between domestic and foreign LLCs.
A domestic LLC is one that’s formed in the same state as the company’s primary business location. For example, if you’re located in Colorado and you start an LLC as a means of opening a retail business in that state, that LLC is considered to be domestic.
You can’t start a foreign LLC without first establishing a domestic one. Then, you will form a foreign LLC when expanding your business into another state. A foreign LLC doesn’t mean you’re located outside the country. Rather, it denotes that your primary business is located in another state.
How Do I Form a Domestic LLC?
Your domestic LLC formation process will revolve around one document: the Articles of Organization. Everything else branches off from this one important form. Be aware that not every state calls it the same thing. You might see it called the Certificate of Organization or Certificate of Formation. Just know that all three of these forms are essentially the same, with a similar purpose and structure.
There’s not a universal Articles of Organization form – each state has its own. But despite the potential differences in appearance, it will require that you provide:
- Your company’s name and physical address
- The nature of your business
- Identity and contact info for your registered agent
- The names of your company’s owner/members
Once you’ve finished the form, congratulations, because you’ve completed the most difficult part of the process! All that’s left is to submit it. Each state has different filing options and requirements, so it’s a good idea to familiarize yourself with your state’s specific processes.
Regardless of which state you’re in, there will be a filing fee ranging from anywhere between fifty to a few hundred dollars. It’s also wise to confirm your state’s filing preferences. Most states will allow you to submit the Articles of Organization by mail, in person, or online, but some require paper documents and others only accept digital submissions. Make sure you follow your state’s filing instructions to the letter or your documents might be rejected.
If this process sounds like something you’d rather not DIY, you have options. For example, some LLC owners will hire a business attorney to form their LLC. This route comes with the peace of mind that you’re receiving a high level of legal expertise. However, attorneys can charge significant fees for these services, so it can be prohibitively expensive, especially for startups on tight budgets.
Before you start slashing the budget to see where you might be able to fit a lawyer’s fees, take a look at online LLC formation services. Using a service can be a great middle-ground between hiring a lawyer and going it alone. You still get a professionally formed domestic LLC, but you also save hundreds of dollars, as formation service fees are much more cost-effective.
If that’s music to your ears, here are two very popular LLC formation services:
- ZenBusiness – $39: Yes, this is the LLC formation service with the best value and included features. While they don’t have the extensive track record as the option below, they’ve formed thousands of businesses so far and very positive online reviews.
- IncFile – $0: IncFile is always at or near the top of our list for LLC formation services because of their totally free LLC creation service, great features and the fact that they include a full year of registered agent service with any formation. They do all of this without sacrificing customer care, and they receive excellent customer feedback, making IncFile a tremendously well-rounded option.
You really can’t go wrong with either of these options. Each one offers top-notch formation services at reasonable prices, so you can hand off those duties without a second thought. Check out their comparison to see them side by side.
There you have it: the domestic LLC. Remember that no matter how eager you are to take your business nationwide, you must first form a domestic LLC before expanding into other states with foreign LLCs.
And remember, while in most states it’s not terribly difficult to draft and file your own formation documents, for many of our readers, it’s worth the money to hire an online LLC registration service. The added convenience and peace of mind are invaluable, and it’s still much less expensive than hiring a lawyer.
But follow the instructions here and we have no doubt that you’ll soon be basking in the glow of your LLC’s success.