A limited liability company (LLC) is a legal arrangement for a firm. It blends a corporation’s limited liability with the independence and absence of formalities offered by a company or sole proprietorship. Any business owner who wants to restrict his or her legal responsibility for company defaults and claims should think about creating an LLC.
EIN (Employer Identification Number)
You can receive an EIN by filling out a PDF Document (Form SS-4) from the Internal Revenue Service (IRS) or by applying for one on the IRS website. Any LLC that hires people involves an EIN in order to pay withheld taxes on such jobs, open bank accounts, register for credit cards, and otherwise function separately as a corporate organization.
Operating Agreement
Operating agreements are not necessary when establishing an LLC inside Louisiana, but these operating agreements are highly essential. By forming an operating agreement, you are creating a guideline on how the Louisiana LLC will operate; basically, a model about how the business’s corporate relations will be organized.
Creating such an operating agreement has been seen to prevent disagreements between staff and owners.
Secretary of State
As the director of the United States Department of Revenue, the secretary of state conducts international strategy with the United States administration. The Cabinet rank, founded in 1789, is comparable to that of a foreign minister in other countries.
The secretary of state is nominated by the president of the United States and confirmed by the United States Senate during a nomination hearing before the Senate Committee on International Affairs.
Because of the significance of their specific offices, the secretary of state, the secretary of the Treasury, the secretary of Justice, and the Attorney General are commonly recognized as the four most powerful Cabinet members.
Secretary of State is a Class I rank on the Executive Calendar and therefore collects the salary recommended for that level (US$221,400 in January 2021).
The specified duties of the secretary of state are to supervise US foreign service and immigration policies, as well as to manage the Department of Revenue. The secretary may also counsel the president on U.S. foreign policy concerns, such as the recruitment of diplomats and ambassadors, as well as the firing and recall of certain people.
The secretary of state has the authority to negotiate, interpret, and cancel international security arrangements. The secretary of state can also serve the United States at foreign conventions, associations, and agencies.
Renewal of LLC
Both corporate companies shall preserve their good reputation by sending an annual report to the Secretary of State. Renewals may be done electronically in a matter of seconds by utilizing the record identifier or ID search feature (found linked in the heading of this paragraph).
In Louisiana, state authorities only need the registered agent information, the principal office address, and a few other bits of specific information. Both filers must request a $10 filing charge for their periodic report, but this fee will escalate if the renewal is late.
Steps In Starting a LLC in Louisiana in 2023
1. Choose a Name for Your LLC
According to Louisiana statute, the words “limited liability company” or the abbreviation “L.L.C.” or “L.C.” must exist in the name of an LLC. (The terms “Low-Profit Limited Liability Company,” the abbreviation “L3C,” or the abbreviation “l3c” must appear in the name of a low-profit SMLLC.)
The name of your LLC may be distinguished from the names of any business entities currently on file with the Louisiana Secretary of State. Online availability checks for names are available. By submitting a Name Reservation request (Form #398) to the Secretary of State, you may assign a name for up to 60 days.
Reservations may be made via mail or online. If the Articles of Organization are submitted electronically, the IRS Employer Identification Number (EIN) of the LLC must be issued. To ensure that the name is available, it is best to reserve it before purchasing the EIN.
When doing business in the real world, you are not forced to use the official legal name registered in your Articles of Organization. A trademark, often defined as an assumed name, “DBA” (short for doing business as), or fake name, may be used instead.
In Louisiana, you must first file your trade name with the Louisiana Secretary of State. You may register electronically or by mail by submitting an Application to Register a Trade Name, Trademark, or Service Mark (Form # 309). For LLCs in the following parishes, online filing is required: Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, and Terrebonne. There is a $75 filing fee.
2. Appoint a Registered Agent
Every Louisiana LLC must have a service of process registered agent in the state. There is a person or corporate company that offers to sign court documents on behalf of the LLC if it is sued.
A registered agent may be (1) a Louisiana resident, (2) a Louisiana private attorney or partnership, or (3) a domestic or international entity permitted to serve as a registered agent for other organizations. A physical street address in Louisiana is needed for the registered agent.
3. File Articles of Organization
The Louisiana Secretary of State accepts Articles of Organization LLC formation(Form #365) to form your Louisiana LLC. The papers and original study can be submitted online.
Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, and Terrebonne parishes need online filing.
Paper versions of LLCs that are not stored in these parishes can be filed via postal mail, email, or fax. The organizers’ signatures on the Articles of Organization and the signature of the registered agent on the Initial R.
If you file online, the articles must include:
- the type of LLC tax treatment—sole proprietor, corporation, or partnership
- the LLC’s name
- the LLC’s purpose–any lawful activity or another purpose
- the street address of the LLC’s office
- the LLC’s mailing address, if different from the street address
- the name and addresses of the LLC’s registered agents
- whether the LLC is member-managed or manager-managed
- the name and street address of the LLC’s members or managers
- an electronic signature of a member, manager, or organizer
- a description of the LLC’s business, including NAICS Code
- the federal EIN (see item 5 below).
If you file a paper application, the articles must include
- the LLC’s name
- the LLC’s purpose
- the LLC’s duration–perpetual or limited, and
- the signature of the organizers.
The paper articles must be accompanied by an Initial Report (Form #973) which must include:
- the LLC’s name
- the LLC’s street address
- the names and street addresses of each of the LLC’s registered agents
- the names and street addresses of each of the LLC’s initial managers or members
- the signature of each person who signed the Articles of Organization, and
- the signature of the LLC’s registered agent.
- report must be notarized if paper copies are filed.
4. Prepare an Operating Agreement
An LLC operating agreement is not mandatory in Louisiana, but it is strongly recommended. This is an internal guide that details how the LLC will be managed. It defines the representatives’ and managers’ privileges and duties, as well as how the LLC will be handled.
It will also help you keep your limited liability by demonstrating that your LLC is actually a distinct corporate enterprise. In the absence of an operating agreement, state LLC legislation would control how your LLC works.
5. Obtain an EIN
And if the LLC has no staff, it must receive its own IRS Employer Identification Number (EIN) if it has more than one participant. If you create a one-member LLC, you must receive an EIN only if it would have workers or if you want to levy it as a company rather than a sole proprietorship (disregarded entity).
An EIN is needed if you file the LLC’s Articles of Organization online. You will get an EIN by filling out an EIN online application on the IRS website. There are no filing costs.
6. Open a Business Bank Account
Keeping your personal and corporate accounts apart allows your accountant to prepare your taxes more efficiently. It may also be used to show that the organization is a different agency from you. If your accounts are intertwined, you may lose your personal money as well as your company profits in a dispute.
Well, the limited liability feature of your Louisiana LLC covers you, but how can anybody tell what money is yours and what belongs to the company if the finances are all merged into the same bank account? Many banks would need evidence that the Louisiana LLC is licensed with the State of Louisiana in order to open an account. Expect to be sent the following forms:
- A stamped—or official—copy of your Articles of Organization
- A Certificate of Good Standing indicating that the organization is duly licensed as a Louisiana LLC.
- A duplicate of your EIN (unless you are a single-member LLC without any employees)
The first two papers are available for free printing from the Secretary of State website. Simply browse their company database for your Louisiana LLC.
7. Get a Business License
A general business license is not needed to create an LLC inside Louisiana, however, you will need an occupational license to work in some controlled industries. Among the regulated occupations are:
- Psychologists, psychiatrists, alcohol educators, and social services are also examples of professionals.
- Engineers, developers, and landscape architects
- Cosmetologists, barbers, nail designers, and estheticians are also examples of beauty professionals.
- Electricians and plumbers
Check out the city-specific criteria for the cities in which you would be working. There may be general business licenses or industry-specific licenses. Denver, for example, does not require general licensing but does require permits for food peddlers, dry cleaners, child care centers, and other companies.
8. Open a wage withholding account
Do you plan to recruit staff and deduct taxes from their pay? The state of Louisiana then allows you to open a salary withholding account, which you can do for free online. If you’re recruiting W-2 workers or withholding taxes from 1099 contractors, you’ll need this. You will use this account to administer and reimburse deferred income tax.
9. File Annual Reports
Every year, on or before the anniversary date of organizing or qualifying in Louisiana, all LLCs doing business in Louisiana shall submit an annual report with the Secretary of State. The annual report must be submitted with the Secretary of State electronically.
Benefits of Forming a LLC in Louisiana
Personal responsibility insurance and pass-through taxes are the two primary advantages of creating an LLC in Louisiana. We’ll proceed with the most significant. Personal responsibility insurance is a privilege provided by all businesses and limited liability partnerships.
It creates a “security shield” between the personal assets and the assets of the company. If the company is prosecuted, you cannot use your personal assets to pay off any loans or obligations. The second advantage is that pass-through taxation is available to llc, sole proprietorships, and partnerships.
Your corporation is not taxed on its own under this principle. Instead, all corporate gains or expenses are reported on a personal tax return.
You escape the downside that Corporations face: double taxation. Paying taxes at both the business and personal levels is referred to as double taxation.
Louisiana LLC vs Corporation
An LLC is Cheaper to Create and Maintain
Unlike a corporation, forming and managing an LLC does not cost a lot of money. The Louisiana Secretary of State charges a one-time filing fee of $50 for the creation of an LLC. The Periodic Initial Report, which is due once a year, costs just $10. It is therefore less costly to manage an LLC than it is to maintain a corporation.
An LLC has Less “Red Tape”
An LLC, unlike a corporation, is not burdened by strict organizational laws. It is not necessary to appoint a board of directors, employ corporate officers, or schedule corporate meetings. A company is liable for this.
An LLC is Not Subject to Double Taxation
As previously said, the gains and expenses of an LLC “pass in” on your personal federal tax return. That is not the case for a corporation, since its earnings are taxed twice. This ensures that earnings are levied at the corporation level, and then dividends are taxed again at the shareholder level.
A limited liability company (LLC) is a “pass-through” organization. This ensures that the earnings are charged at the same pace as your own. The LLC does not file income taxes with the IRS. This is not to say that a Corporation has little potential for development.
This isn’t the case. They are simply more difficult to manage and are best fit for businesses who need to attract capital from outside investors. Consider technology and startup firms to start an llc.
To start an LLC could be a safer choice for business owners (especially those just starting out) who want to escape the hassle of operating a complicated corporate business structure (but also want personal asset protection).
Louisiana LLC vs a Sole Proprietorship/Partnership
An LLC Member Enjoys Personal Liability Protection
An LLC provides a “shield of security” between your personal assets and the assets of your company. When the corporation is prosecuted, only the company’s funds will be used to compensate off the LLC’s debts. In brief, your personal belongings (bank account, home, vehicle, etc.) are safeguarded and secure in the event that the company is sued.
There is no other precaution for a single proprietorship. Since the law considers you and your company to be the same thing, your personal properties will be included if your business is prosecuted. The same holds true with a Partnership.
There is no different agency formed in this situation. When the business is prosecuted, your and your partner’s personal properties will be used to pay off its debts.
Get Business Insurance For Your LLC Louisiana
Company insurance enables you to control costs while concentrating on the success of your LLC. The below are the most popular forms of company insurance:
- General Liability Insurance: This is a large insurance scheme that covers the corporation against claims. The majority of small companies obtain general liability protection.
- Professional Liability Insurance (PLI) is a form of company insurance that protects cases of malpractice and other business negligence for professional service suppliers (consultants, accountants, and so on).
- Workers’ Compensation Insurance: A form of insurance that protects staff who are sick, disabled, or killed on the job. Workers’ compensation policy is required by statute in Louisiana for companies with one or more staff, except officers and LLC registered agent.
How to start an LLC Louisiana – Create Your Business Website
Creating a website is a significant move toward legitimizing the business. Any organization requires a website. And if you believe the company is too limited or in an offline market, if you do not have a website, you are losing out on a significant portion of future clients and sales.
Some people may believe that designing a company website is out of their control because they lack website-building expertise. Although this was a legitimate problem in 2015, online technology has seen substantial strides in recent years, rendering the lives of small business owners even easier.
The below are the key explanations why you can not put off creating your website:
- Any legal company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
- Social networking accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for a business website that you own and manage.
- Website builder software, such as the GoDaddy Website Builder, has made it incredibly easy to create a basic website. You don’t need to employ a web developer or designer to build a website you’re proud of.
Send Out a Press Release
Press releases are one of the simplest and most effective ways to advertise the business. They are still one of the least expensive tactics since they:
- Gives advertising
- Establish your brand’s online presence Boost your website’s search engine optimization (SEO), drawing more customers
- Are a one-off commitment in terms of time and resources
- Have long-term advantages
Tax Filing Requirements In Getting LLC in Louisiana
Sales Tax
If you’re selling a physical item, you’ll usually need to apply for a seller’s permit online at the State of Louisiana’s website. This credential entitles a corporation to receive income tax on taxable sales.
The sales tax, commonly known as the “Sales and Use Tax,” is a fee imposed by governments, cities, and towns on commercial purchases including the exchange of such taxable products or business services.
Employer Taxes
If you have workers in Louisiana, you must apply with the Unemployment Insurance Tax and the Employee Withholding Tax electronically at the State of Louisiana’s website.
Federal LLC Formation Tax Filing Requirements
Most of the LLC formation must file Form 1065 Partnership Return (most multi-member llc use this form) and Form 1040 Schedule C with the IRS each year (most single-member llcs use this form). Your federal taxes would be affected by how you pay yourself as an owner.
Avoid Automatic Dissolution
When an LLC fails to file one or more state reports, it can face penalties and even automatic dissolution. When this occurs, LLC shareholders run the risk of losing their LLC limited liability rights. A good licensed registered agent service will help you avoid this by informing you of impending filing deadlines and sending information on your behalf.
Hiring Employees
If you want to recruit staff for your business, take these measures to keep in compliance with the law:
- Confirm the prospective employers are qualified to serve in the United States.
- Employees can be reported to the state as “recent recruits.”
- Employees can be equipped with employees’ compensation benefits.
- Employee taxes should be withheld.
- Print workplace compliance posters and display them in high-traffic parts of the workplace.
Frequently Asked Questions (FAQs)
Should I form an LLC in Louisiana?
Whether you are just starting out or have been working as a sole proprietor, you should think about creating an LLC. LLCs restrict an owner’s legal responsibility for corporate debts and claims and have a great deal of versatility in terms of business control, management, and taxes.
How do I know if my LLC name is available?
It is important that the name of your LLC be distinguished from the names of any existing companies on file with the Louisiana State Corporations Board. To ensure that your suggested name is available, you may perform a free name search on their website.
How much does it cost to form an LLC in Louisiana?
It is important that the name of your LLC be distinguished from the names of any existing companies on file with the Louisiana State Corporations Board. To ensure that your suggested name is available, you may perform a free name search on their website.
Do I need an operating agreement for my Louisiana LLC?
Operating agreements are not needed in Louisiana for LLCs, but they are strongly recommended. An operating agreement can help secure your limited liability status, avoid financial and managerial misunderstandings, and guarantee that you choose the laws that control your company rather than state law by design.
Do I need a business license in Louisiana?
Depending on the nature of your company and where it is based, your LLC can include additional local and state business licenses. Check with the clerk of the community where the LLC’s primary place of business is situated regarding municipal licenses (or county or parish if it is in an unincorporated area).
Check the Secretary of State’s geauxbiz website for state license records. You will build a business license checklist by creating an online account and then logging in.
Are there Louisiana business taxes I need to pay?
In certain situations, such as whether you want to market merchandise and pay income tax, or if you have staff, you must file with the Louisiana Department of Revenue (DOR). You should log while still filing the Articles of Organization electronically. You may also file electronically at the Louisiana Taxpayer Entry Point (TAP) or on paper with Form R-16019.
Can a foreign LLC do business in Louisiana?
To do business in Louisiana, all LLCs formed outside of the state shall file an Application of Foreign LLC operating agreement with the Louisiana Secretary of State (Form 972). The application may be submitted either in hard copy or online.
International LLCs with offices in the following parishes must file online: Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, and Terrebonne.
Foreign LLCs may select a registered agent physically located in Louisiana for operation of process. Fill out an Application for Authority to Do Business in Louisiana to get underway.
A Certificate of Good Standing from the international LLC’s home state, dated no more than 90 days prior to the filing of the certificate, shall accompany the completed submission.
In Texas and Alabama, get a certificate of life from the secretary of state rather than a certificate of good standing from the Louisiana Department of Revenue.
Can I form a single-member LLC in Louisiana?
A Louisiana single-member limited liability company is treated the same as a multi-member LLC for most purposes of creation. The procedures for forming a single-member limited liability company in Louisiana are the same as those outlined above. When it comes to preparing a tax report, single-member LLCs have greater leeway.
Can I form a professional LLC in Louisiana?
If you wish to create an limited liability company in Louisiana to offer a licensed consulting service, you must first form a professional limited liability corporation(PLLC). Architects, lawyers, dentists, registered public accountants, and other practitioners are examples of technical business services.
In general, if you have a business that necessitates acquiring a Louisiana state certificate before training, you are offering a skilled service. Limited liability companies may be created to offer professional services under Louisiana law.
However, only one type of service can be offered, and all of the limited liability company’s owners must be certified or registered to offer the professional service for which the limited liability company was established.
Can I dissolve my Louisiana LLC when I’m done?
If you decide to shutter the company and end all activities, you can properly disband your limited liability company to reduce your responsibility for claims and government fines.
Do I need a Certificate of Good Standing in Louisiana?
A Certificate of Good Standing, also known as Certificate of Existence in Louisiana acts as a verification document of your limited liability company has adhered all legal requirements, properly formed and maintained. There are various instances which require you to have a Certificate of Good Standing such as open a business account, applications of business licenses and permits and seeking funds from banks.
What Is The Minimum Wage in Louisiana?
The Louisiana minimum wage stands at $7.25 per hour, as it has over the last five years. Louisiana’s minimum wage is the same as the federal minimum wage. The Louisiana minimum wage was last increased by $0.70, from $6.55 to $7.25, in 2008. After 2009, the federal rate has been unchanged.
Conclusion
If you want an easy, low-cost company that covers your personal properties in the event of litigation, then forming an limited liability company is definitely the best choice for you. If you want a company that is easy, affordable, and protects your personal belongings, an limited liability company is the right choice for you.
Starting a business correctly doesn’t have to be difficult. With over 15 years of experience consulting new businesses and start ups, Matthew is probably the best person to help you set a strong foundation for your business.