Qualifications of Obtaining an LLC

• There are six conditions to be fulfilled to qualify as an LLC. Jupiterimages/Brand X Pictures/Getty Images

  A Limited Liability Company (LLC) is often the chosen business structure among small business owners. An LLC limits the personal liability exposed to entreprenuers and the monies earned or lost in the enterprise are legally separate from one's personal assets. LLC owners, also known as members, love the fact that business profits are taxed just once. Establishing a business may not be very difficult but there are six steps required to qualify as an LLC.

Articles of Organization

• Research your chosen name to avoid infringement. Young business man and woman at office image by dimis from Fotolia.com

  An LLC is regulated by the state in which the business will operate. The regulations are in place to protect the public, to make sure the business is properly taxed and to identify the business. Owners of an LLC are required to register a company name with the Secretary of State. Researching your chosen name is essential to ensure that you do not choose one that is already being used or protected by a copyright or trademark.

Federal Employer Identification Number

• A FEIN identifies your business to the IRS. tax time image by Gale Distler from Fotolia.com

  A Federal Employer Identification Number (FEIN) identifies a business to the Internal Revenue Service (IRS) just as a social security number identifies a person to the IRS. An LLC will use the FEIN number obtained from the IRS on legal documents such as tax forms, business licenses and applications for permits. In contrast, a sole proprietor without employees can use his social security number on all business documents but will thereby expose himself to personal liability for losses incurred by the business.

What's in a Name?

• Register your DBA name with the county clerk. business card holder image by Brett Mulcahy from Fotolia.com

  A business trade name that does not match the LLC name must be registered with the county clerk in the state the business operates. The chosen name is a Fictitious Business Name (FBN), commonly referred to as a DBA or "doing business as" name. The FBN registration provides consumer protection because it identifies business owners of legitimate businesses while preventing shady enterprises from setting up shop, taking advantage of customers, then leaving town without a trace.

Seller's Permits

• Tangible goods require seller's permit. east clothes image by Viacheslav Anyakin from Fotolia.com

  Any LLC selling a tangible good is required to obtain a seller's permit from the state agency that governs sales taxes. Tangible goods are any products that can be seen or touched. Examples are hair care products, food, furniture or clothing. If your LLC provides intellectual property (for example, a consulting business), a seller's permit may not be required.

Licensing

• Apply for your business specific licenses and permits in time. business image by peter Hires Images from Fotolia.com

  Some businesses are prohibited from operating unless certain permits or licenses are obtained by the owners. For example, a dry cleaning store may be required to obtain a specialized license to operate the machinery or use the cleaning chemicals, a zoning permit to do business in certain neighborhoods and a fire inspection to comply with local fire regulations. Business owners in the service sector, such as financial planners or beauticians, will have to pass a state certified exam in order to provide their service.

Local Taxes

• Register with your city's tax collection agency. opening balance image by max blain from Fotolia.com

  Obtaining a local Tax Registration Certificate is how an LLC registers with its city's tax collection agency. Most cities have differing tax rates for the various business types. A beauty salon may have one tax rate while a restaurant pays at a different rate. Most cities require LLC owners to pay an annual fee for registering with their local tax authority.