You can form an LLC yourself even if you have no formal legal or business training. A limited liability company is the easiest type of business entity to create and requires only five steps:
- Choose a business name that complies with state law
- File your Articles of Organization and pay the applicable filing fee
- Draft an operating agreement
- Publish notice of your intent to form a limited liability company
- Gather any required licenses or permits needed by your business area
Despite what the graphic may imply, uneven ownership in an LLC does not necessarily mean an unfair distribution; there may be a number of reasons LLC members may decide to own an unequal share in the company. For instance, some members may have contributed more capital to the LLC and therefore demand a larger ownership interest, or a member may be a silent partner and wish to contribute only a small amount to the company in exchange for a small share. Regardless of the reason, the LLC ownership structure is flexible enough to allow for any distribution of ownership among the members.
A decision you must make when starting a limited liability company is whether your LLC will be member-managed or manager-managed. Though you may change your mind later, it is better to think about your preferred structure at formation rather than needing to amend your filings. Whether you start an LLC as member-managed or manager-managed depends on what level of authority you want your members to have in the business.
Though not all states require an operating agreement and none require you to file it, this document may be the most important one for your limited liability company. The operating agreement governs the relationships among each of the LLC’s members. Even in a partnership between good friends, an LLC should have a detailed operating agreement in the event of unforeseen disputes.
Adding a member to an LLC is straightforward, but there are slightly different considerations when you add a new member to a single-member LLC. You will not need to re-register your LLC with the state, but you may have to file an amended Articles of Organization.
Though not required, you should also amend your Operating Agreement to clarify the relationship you have with your new partner. Due to the flexibility of the LLC structure, your new partner may invest any amount of time or money into the LLC and receive any share of the LLC you two deem agreeable.