Louisiana is located on the United States’ southeast coast. This state is a rare blend of geography, history, and an ever-expanding economy. Because of all of these reasons, it is a business-friendly state. If you choose to start a company in Louisiana, you can choose several choices, including limited liability companies or LLCs. The best choice for a startup is an LLC. It’s a hybrid business arrangement that blends certain aspects of a partnership with those of a corporation. As a result, the owners achieve some organizational flexibility. Now that we know what an LLC is, let’s take a look at some of the advantages it provides:
- Setup is easy
In contrast to other business structures, creating an LLC is easy. There is less paperwork for the participants to do, and it is, therefore, less expensive.
- Profit-sharing restrictions are minimal
When there are many company owners, the benefit will not be distributed equally; in certain businesses, the owners’ rights and options may be restricted. However, in an LLC, the owners will allocate their profits as they see fit. They will split the benefit based on each member’s resources and sweat equity contributions.
- Members of the LLC
You are free to have as many owners as you want. However, if one of the LLC’s owners leaves, the LLC may be dissolved. But then there’s the operating agreement to consider. Members will negotiate terms in the contract that will allow them to continue working even if one of them leaves.
- Payment obligations
When an LLC has only one owner, it is regarded as a single proprietorship. As a result, the LLC is responsible for self-employment taxes. It is a partnership if the LLC has more than one member, and the members split the gains and losses.
- Legal liability is reduced
Members of an LLC are protected by liability insurance, which means they are not financially liable if their corporation falls into debt or issues debt.
However, in some cases, members may be held liable for the actions of their employees.
We now recognize the advantages of creating a limited liability corporation. Let’s take a look at the steps involved in making one:
Step 1: Choose a Name for your Louisiana Limited Liability Company
The first and most crucial step in creating an LLC is to choose a name. It will seem plain, but it is not because you must select a name representing what you give or do. Customers’ first impression of your company is based on the brand. As a result, it must be appropriate. Some guidelines follow, such as using the terms limited liability corporation, the abbreviation LLC or LC in the name. Also, make sure the name doesn’t mean something illegal, unethical, or scandalous or that it’s associated with the government. Without the commissioner’s approval of the financial institutions’ office, the company’s name cannot contain terms like a bank, savings, insurance, trustee, trust, safe deposit, loan, homestead, etc. If you want to use limited terms, you’ll need to fill out some extra paperwork. The secretary should approve the state’s name. For your proposed name to be accepted, it must be distinct from the names of all other businesses registered with the Louisiana secretary of state.
Check to see if the name is available
You must ensure that the name you choose is not already in practice by another company. You will find out more by going to the State of Louisiana’s official website. You can also call them directly at 225-925-4704 to see if the name is still available. The third way to find out is to submit fax. The secretary of state’s office can be contacted by fax at 225-932-5314. You may also give them an email with your questions. And if you find that the names you want are already taken, you’ll need to make some precise adjustments.
Reservation of a name
Now, after all of your deliberation and taking all of the steps, you’ve finally settled on a name. However, your LLC takes longer to get on the floor due to specific issues; it may be legal or paperwork, or something else. Now, one thing that concerns you is what happens if anyone uses your selected name. All of your efforts will be in vain. But don’t worry, because you can put a hold on your name for 120 days. You may send the request either online via the geauxBIZ or by mail to the following address:
P.O. Box 94125
Baton Rouge, LA 70804-9125
Are you in the area around Baton Rouge? If yes, you can further personally deliver them to this address: 8585 Archives Ave. You can also fax your completed form: (225) 932-5314.
These methods cost $25. Each one takes a different amount of time to process. The online process takes about 1 to 2 days, while the hard-copy process takes about 3 to 5 days. If you want to speed up the process for the hard-copy filings; there are two possibilities:
- $30 for a 24 hour/a day service
- For $50, you can get immediate service.
Step 2: Pick an Agent to work as your Registered Agent
Before you start your Louisiana business, you must find a registered agent or hire service in the state. You may employ a registered agent service or have a professional act as your registered agent. On behalf of your institution, the registered agent is in charge of the mail and legal correspondence; if you nominate someone to serve as your agent, bear in mind that that person is responsible for receiving legal mail on your LLC’s behalf.
To be a licensed agent in Louisiana, you must meet the following requirements:
- In Louisiana, a legal address is required; a PO box is not acceptable.
- The company’s licensed agent must be available on working days and during regular business hours.
Who are the licensed agents allowed to be?
Individuals and businesses may register, but there are some restrictions:
- the agent can be an individual, but he or she must be a full-time resident of Louisiana.
- If the business entity’s primary place of business is in Louisiana, it may be a registered agent.
- If a foreign company is approved to do business in Louisiana and has a regular business there, it may be a registered agent.
The state mandates the appointment of a registered agent. The state demands that your LLC have a contact point with them, which the registered agent offers. After you nominate a registered agent, they can receive official correspondence, notes, and documentation on your LLC’s behalf. As previously stated, registered agents may be either an entity or a service. Let’s look at it more closely:
If all of the conditions are met, anybody may be the registered agent. If you believe that an agent needs specialized training, you are mistaken. The criteria are stated above but bear in mind that the applicant must be 18 years of age, at least, and have a physical street address in Louisiana. As a result, you can recruit anybody you want, including friends, acquaintances, relatives, etc. You may also employ the services of judges, solicitors, and prosecutors.
Service of Registered Agents
If you don’t feel comfortable hiring a person, you can always use registered agent services. These programs will ensure that the company runs efficiently. Alternatively, you should hire a nationwide licensed agent service to handle all of your LLC agent responsibilities.
Step 4: Register the Articles of Organization with the Secretary of State of Louisiana.
The Article of Organization is the document that makes your LLC a legal business. You now have all of the correct information, your LLC’s name, and the registered agent, which you have reported in a document with other essential data. The Articles of Organization are the name of this document. The following details must be included in the articles:
- The names and addresses of the owner/owners
- All information of the Registered agent
- The framework of management
- The name of the person who signed the contract as an incorporator.
This move establishes the company’s credibility. The Articles of Organization may be filed in one of three forms. Let’s take a look at each one individually:
To file the Articles of Organization online, go to Louisiana’s geauxBIZ portal and do so. If you don’t already have an account, you’ll need to build one before filing your documents. One significant thing to remember is that certain parishes are still expected to file the forms electronically. According to the Secretary of State’s website, businesses in the mentioned parishes must file paperwork online: Livingston, Calcasieu, Tangipahoa, Orleans, Ouachita, Ascension, Caddo, Rapides, East Rouge, Bossier, Jefferson, St. Tammany, Lafayette, and Terrebonne.
In 24 to 48 hours, the online submission will be processed.
You can verify whether your parish needs you to file electronically or not by sending a letter. If you do not need the online form, you can choose to file by mail. To do so, fill out the paper form and mail it along with your fee to the following address:
PO Box 94125
Baton Rouge, LA 70804-9125
Filing via fax
Your form can also be faxed to the office. Fax your completed form to (225) 932-5314.
If you live in Rouge or a nearby office area, you can personally deliver your document. You must fill out the form and mail it along with your fee to the address: 8585 Archives Ave, Baton Rouge, LA 70809.
Hard-copy submissions can take 3 to 5 working days; if you can’t wait that long, you can speed up the process by following these steps:
- For $30, you can get 24-hour support.
- For $50, you can get immediate service.
You must also present an initial report in addition to your company’s Articles of Organization. Ensures that the documentation and the articles of incorporation are also notarized.
Step 5: Draft an Operating Agreement for a Louisiana Limited Liability Company.
For any company, it is the contract that binds the LLC together. It establishes the company’s policies, actions, and activities. Although the state does not demand an operating agreement, it is good to have one. It will be helpful in the future if a conflict arises, as it will offer legal security and credibility in the eyes of banks, courts, and other institutions.
In layman’s terms, it’s an instruction manual that lays out the ownership and operating procedures. The agreement specifies how decisions should be taken, how income should be shared, how to terminate or add a new member, and so on. When all the rules, do’s, and don’ts are laid out, it becomes easy to operate.
Operating agreements are crucial.
An all-inclusive operating agreement means that all of the owners are on the same page, which will help the business operate more smoothly. The agreement thus eliminates the probability of dispute or serves as proof in the event of a disagreement. The operating arrangement will specify how the assets should be shared if the LLC is dissolved. If one of the representatives wishes full possession, this paper can be used as evidence in court.
So, if you want to compose an agreement, you can do so in two ways. You can draft it yourself. There are templates available online to assist you; with their assistance, you can construct valuable documents. You may also employ a lawyer to draft the contract for you, as the lawyer can ensure that no information is missed. The solicitor will adhere to state law and prevent default rules. What are these default rules, exactly? Every state has a set of rules and regulations on how an LLC can work.
If your company is dissolved, your company’s operating agreement will dictate the steps to be taken. However, if it is not included, your debts and properties’ fate is decided by the state for you. Default rules, in general, are not in the company’s favor. As a result, make the operating agreement as inclusive as possible. However, since these laws are general and not designed for your particular company, they often work against LLC interests. Consequently, it’s always better to stop them by making the agreement as inclusive as possible.
So, now you know the value and importance of an Operating Agreement in the company’s smooth running. Now, it’s time to move on to the next step.
Step 6: The Internal Revenue Service will provide you with an Employer Identification Number.
The Internal revenue service provides EIN or employer identification numbers. You have to apply for the EIN. It doesn’t matter whether you have an employee or not; you have to get this number because it is required:
- For the LLC, to open a business bank account.
- To recruit employees for the corporation for federal and state tax purposes.
After forming your LLC, you can get your Employer Identification Number from the IRS for free. There are three options: online, by fax, or via the mail. Since you know that the LLCs don’t pay the income tax returns directly, that doesn’t mean LLC doesn’t deal with the federal taxes. Some conditions have to take care of these taxes, such as labeling themselves as a corporation, selling goods, or hiring employees. So, the IRS uses EIN to recognize your company. In this way, it can keep a watch on your tax returns.
You will get your EIN by filling out an online application. This is the fastest method, and you’ll get your phone number right away. From Monday to Friday, from 7 am to 10 pm, you can apply.
To fax your form, you must first download and fill out Form SS-4. After that, fax the form to (855) 641-6935. In four business days, you will obtain your EIN.
The choice of mailing the form is the slowest; the application requires about four weeks to be processed. However, if you agree, you must complete the Form SS-4 and mail it to:
Step 7: Taxes and Licenses
If you completed all six steps outlined above, your LLC is now complete. But don’t get your hopes up just yet. As a company owner, it’s essential to keep an eye on the future and tie up any loose ends. Some conditions must be met for the LLC to operate smoothly in Louisiana and remain in good status with the department. So, before you get down on the board, make sure you meet the following requirements:
Federal Income Taxes
You might be wondering, because we explained earlier that the LLC does not pay federal income taxes, what are these federal taxes? Taxes, including the LLC’s profits and losses, are paid by the LLC’s owners on their income tax returns. If your LLC is taxed as a corporation, you must pay a separate corporate income tax return. Apart from the federal taxes, there are some local and state taxes too.
State and Local Taxes
State taxes work similarly to federal taxes. Owners must disclose expenses and profits on their tax returns, and if your company is taxed as a corporation, you must file corporate tax. Louisiana also does not charge a privilege tax to the property owners.
Your LLC circumstances might force you to pay additional taxes related to business. For instance, if you recruit workers, you must file withholding tax and unemployment tax; if you sell goods, you must pay sales tax and use tax. There are also other extra taxes to remember. You may be required to pay taxes to the state, city, or municipality where you reside. As a result, it’s a good idea to review both the state and local government’s guidelines.
Obtaining a license
You will have to get a license based on the kind of business/industry you conduct. A permit from Louisiana, Department of Health Retail Food Program, is required to open a grocery shop. If you’re going to open a restaurant or cafe, you’ll need a food and services license, a health department license, a liquor permit, and more. The Articles of Organization undoubtedly legitimate your company; however, the permit is necessary to carry out the functions. The Louisiana.gov Business licenses online page has all the information you need about the licenses. Different departments are in charge of various permits, but the GeauxBIZ page can streamline all licensing processes. It’s also worth consulting with the local authority, government, towns, or counties to see if they need special permission.
Step 8: Reporting on the Annual Report
We stated in step four that you must provide a notarized Primary Report with your Articles of Organization. After that, the LLC must file an annual report every year before or on the formation date. Each piece costs $30 to register, and you can do so via the government’s geauxBIZ account. A month before the due date, you can receive reminders or email notices via your geauxBIZ online account. You can consult the state’s video guide if you have any concerns about the annual report.
This guide will walk you through each step in detail and answer all of your inquiries. Mark your calendars to ensure you don’t forget to file the annual report; failing to do so could jeopardize your good position with the state department. Your LLC can be officially dismissed if you don’t file for three continuous reports.
We’ve made it to the finish line. Congratulations, your LLC is now ready to exchange. The phase can seem lengthy and exhausting at first, but it will pay off in the future when you see the results in your sales, business deals, and so on. You’ve done well up to this point; now it’s time to take off, start your company, hire workers, make a profit, and most importantly, expand. So move forward and drive your business ventures to new heights.