How to set up an Ltd company
In recent years, Limited company has become a quite popular form of legal structure for small and middle level businesses that wishes to incorporate.
The exact requirement for setting a limited company varies from state to state. Setting up of a limited company is a much simple process that can more often be achieved in an hour or two, depending on the intricacy of the organizational structure.
Here are some basic steps that requires to be formulated for setting up a limited company
· Articles of Organization form
You must obtain a copy of Articles of Organization form from the Secretary of State office of the particular state where you want to incorporate the business. While incorporating, you must find out if the state requires you to place a notice in the newspaper concerning the same. You must also find out if there are any definite rules concerning the business names.
· Name of the Business
You must select a name for your business that act in accordance with the state rules for business names of a limited company. Each state has its own list of prohibited words like “Incorporated”, “Corporation”, “City”,”Insurance” and others. The legal name should end with LC designator, for example, XYZ Limited Company. You cannot pick a name that already exists in the name of Limited company.
· Fill the articles of association form
It is a simple process, which requires you to fill the items like business name, purpose of operation, principle address, names on initial members and registered agent. At this point, you need not specify the management structure and the ownership distribution.
· Submit the Articles of Association form
The form is submitted to the Secretary of State accompanied by the apposite filing fee. The amount of fee varies from $ 40 to $ 900 as per different states. In certain states you are also required to pay Corporate Tax apart from filing fee.
· Operating agreement
Lastly, it is important to create an Operating Agreement for Limited Company which clears out the management and financial rights and responsibilities of the members, such as division of profits, who contributes in the need for additional capital for the company, terms under which members can leave the company, circumstances in which business can cease to exist etc. These are the important points to consider before setting up a limited company to avoid any complications and hurdles in future.
However it is not required to submit the Operating Agreement at the time of filing and can be done after all the legal filings are over.