How to Start an LLC in Louisiana (May 2024 Update)
A limited liability company, or LLC, is a popular business structure that offers liability protection and tax advantages while maintaining flexibility in management and operations. Forming an LLC in Louisiana can be beneficial for several reasons:
- Limited Personal Liability - LLC owners, called "members", are protected from personal liability for business debts and legal judgments. Creditors can go after the LLC's assets but not the personal assets of the members.
- Pass-Through Taxation - LLCs themselves don't pay income tax. Instead, profits and losses "pass through" the business to the members' personal tax returns. This avoids double taxation.
- Flexible Management - Louisiana LLCs can choose member-managed or manager-managed structures. This allows tailored control and decision-making processes.
- Compliance Simplicity - Compared to corporations, LLCs have fewer complex regulations and formalities in Louisiana. However, they still provide legitimacy and credibility.
While starting an LLC in Louisiana has advantages, you need to take the proper legal steps when forming and maintaining your business. This guide will outline the key requirements.
Steps to Form an LLC in Louisiana
Forming an LLC in Louisiana involves several key steps:
1. Choose a Business Name
The first step is to pick a name for your LLC and check availability. Your name must abide by the following rules:
- Include "Limited Liability Company", "LLC", "L.L.C.", "L.C." or "LC"
- Distinguishable from other names registered in Louisiana
- Doesn't imply unlawful purpose or government affiliation
- Doesn't contain restricted words like "bank" or "insurance"
You should search the Secretary of State's database to ensure your chosen name isn't already taken. You can also reserve a name for 60 days for a $25 fee.
It's also wise to buy a matching domain name for your potential website and claim social media handles. Having an aligned brand identity makes it easier for customers to find your business online.
2. Appoint a Registered Agent
All Louisiana LLCs need a registered agent - an individual or company that agrees to receive official documents on your behalf. Agents must:
- Have a physical street address in Louisiana
- Be available during normal business hours
Using a registered agent service can save you time and provide privacy since your contact information isn't public record.
3. File Formation Documents
To form your LLC, you'll need to file Articles of Organization and an Initial Report with a $100 fee. Most parishes require online filing through Louisiana's geauxBIZ portal.
Your articles must include basic information like your LLC's name, purpose, duration, and the organizer's signature. The Initial Report additionally requires your registered office address and agent details.
4. Create an Operating Agreement
An operating agreement establishes rules and provisions for your LLC's ownership and operations. While not legally required, it can help settle disputes and align owners. Key details include:
- Member responsibilities
- Profit/loss distribution
- Voting procedures
- Changes in membership
- Dissolution terms
Even single-member LLCs benefit from having an operating agreement.
5. Obtain an EIN
An Employer Identification Number (EIN) from the IRS creates a separate business identity for tax and banking purposes. Single-member LLCs only need one if they have employees or elect corporate taxation.
Most multi-member LLCs should get an EIN even if they don't have employees. Applying online takes only 15 minutes.
Post-Formation Steps
After creating your Louisiana LLC, there are still important compliance and operational steps:
1. Open a Business Bank Account
Maintaining separate business finances prevents personal asset exposure. Additionally, most banks require business accounts to get loans or credit cards.
For more information, take a look at our article on the key benefits of business checking accounts.
2. Stay Compliant
Louisiana LLCs must submit annual reports and pay registration fees yearly to stay in good standing. Keep your business address and agent updated.
You'll also need to register for relevant state tax permits, local business licenses, and appropriate insurance policies.
LLC FAQ
How much does forming an LLC cost in Louisiana?
The state charging fee is $100 to file your articles of organization. You may incur additional expenses like registered agent fees, permits, licenses, and optional filing services.
How long does LLC approval take in Louisiana?
The processing timeline varies, but the Secretary of State generally approves online-filed LLCs within 2-3 business days. Expedited filing is available for an extra fee.
Do I need an EIN if I'm a single-member LLC?
If you have employees or choose corporate taxation, yes. Otherwise, single-member LLCs can simply report profits/losses on the owner's personal tax return.
Are operating agreements mandatory?
No, but having an operating agreement is highly recommended to help settle disputes and outline ownership terms. It also adds legitimacy.
What are the annual LLC costs in Louisiana?
You'll need to file an annual report with the $30 fee. You may also owe state registration fees, taxes, accounting costs, registered agent services, legal fees, insurance policies, licenses, etc.
How do you dissolve an LLC in Louisiana?
Get approval from LLC members, publish a dissolution notice, file an Affidavit to Dissolve ($100 fee), and complete final tax filings. Then you can liquidate assets and close your LLC.
Conclusion
Forming an LLC can be a wise move to build business credibility while protecting your assets. Louisiana makes starting an LLC relatively straightforward, but keep in mind important compliance steps like securing your business name, appointing a registered agent, creating an operating agreement, obtaining an EIN, and staying current with annual reports.
By following the steps outlined and leveraging resources like registered agent services, filing services, templates, and tools – you can set your Louisiana business up for success.