How to Create an LLC with One Member?

By The Law Office of Yoel Molina.
 
Any single-member limited liability corporation (SMLLC) formation process must include at least one essential step: submitting articles of organization (or a document comparable) to the relevant state authority (usually the secretary of state). To do it, though, you must first confirm that operating as a limited liability corporation is not forbidden for your company (LLC). In addition, submitting articles of organization is just one of many duties you'll have to handle while launching your new business, provided you can structure it as an LLC. Additionally, you'll need to decide on a management structure for your SMLLC, and having an operating agreement is always a smart idea. Here, a few more significant duties are covered.
 
Can I Establish an SMLLC?
Even though LLCs were initially intended to be multi-person corporations, every state now permits the formation of LLCs with just one member. The formation of any LLC, including SMLLCs, is subject to restrictions or additional criteria for some professions in the majority of states. More specifically, you probably won't be able to create a regular LLC in your state if you work in a profession like medicine, law, accounting, architecture, or engineering. You must instead create a professional limited liability company, or "PLLC," as most states refer to it. 

From one state to the next, different services may be designated professions. For instance, New York offers more than 30 relevant professions, including interior design, acupuncture, massage therapy, and podiatry. In general, in order to establish a PLLC, you must be able to demonstrate that you have the necessary state license for your line of work and obtain approval from the pertinent state licensing body to do so. Additionally, you'll need to have enough malpractice insurance because a single-member PLLC's limited liability protection won't shield you from your own professional negligence.
 
Choosing a Company Name:
You will need to give your SMLLC a name as part of the state registration process. While picking a company name might be enjoyable, you also need to exercise caution. The name you provide must not clash with the name of an existing company that is already registered in your state. For instance, your application will be denied if you submit the articles of formation for an LLC with the name Gambol Gardens, LLC, but your state already has a Gambol Gardens Corporation. You must do a search of business names that are already registered in your state to avoid rejection.
 
Obtaining an Employer Identification Number (EIN)
If your SMLLC needs an EIN primarily relies on how it is taxed and whether a company employs people. More specifically, SMLLCs are by default viewed by the IRS as disregarded entities and do not submit separate income tax reports. Instead, the single member is regarded as self-employed, and taxes on business income are included in the member's personal tax return. If that applies to you, you are not required to obtain an EIN and can file your business's taxes using your own Social Security number instead.
​
Even though it is not needed by tax law, there may be other circumstances in which you may benefit from having an EIN. To open a business account with a bank, you typically need an EIN. Additionally, businesses that you do business with could need an EIN to process payments. Additionally, several states mandate that all LLCs use an EIN on their state tax forms, regardless of how they are taxed under federal law.
 
Other Crucial Tasks:
Other steps you must take to create a new SMLLC include picking a name and management structure, obtaining an EIN, filing articles of organization, and creating an operating agreement. You must open business bank accounts, maintain accurate business records, get insurance, and acquire any required business licenses.


If you have any questions about this article or similar matters, please contact our office, the Law Office of Yoel Molina, P.A., at fd@molawoffice.com or 305-548-5020, option 1