A limited liability company, also known as an LLC, is a business structure that offers many advantages to entrepreneurs.
There are many benefits to forming an LLC in Louisiana, and one of the most important ones is how easy it is to form it and how inexpensive it is as well.
This blog post will take you through all the steps of getting an LLC in Louisiana and explain everything you need to know about how they work and how they can help your business grow.
What Is a Louisiana LLC?
An LLC in Louisiana is a business structure that offers many advantages for entrepreneurs, such as limited liability protection, tax implications, etc.
There's no limit on who may be an LLC manager (those who make decisions) or member (owner), which also means there's no limit on its owners' number either.
Louisiana limited liability company represents the official state business entity of Louisiana.
This type of LLC organization grants all the benefits and responsibilities of some other structure, such as S or C corporation, partnership, or sole proprietorship.
That implies all the obligations, liabilities, and restrictions which apply to them. LLC owners enjoy pass-through taxation, which means they don't have to pay corporate income tax on it. Instead, 100 percent of net profits or losses are passed through directly onto individual income returns for each member (or owner).
In Louisiana, LLC members are either people or other business entities that have a stake in the business. They are not legally responsible for the LLC's debts or obligations. In comparison to partnerships and sole proprietorships, LLCs in Louisiana have more stringent regulations, but they do provide some protection against personal liability.
What are the benefits of Louisiana LLCs?
The benefits of registering an LLC in Louisiana include:
- Pass-through taxation means that the LLC is treated like a disregarded entity for tax purposes. This can be beneficial in saving money since an LLC does not have to file separate federal income taxes, payroll taxes, or state franchise taxes.
- There are no restrictions on who may own an interest in a Louisiana LLC, and its assets don't become the property of the creditors if there is a lawsuit filed against the owner(s).
- Personal asset protection entitles any shareholder to limited liability status provided they do not actively manage your company's day-to-day operations. If someone sues you personally because their business deal fell through, they cannot go after personal assets held by you within your business structure.
LLC in Louisiana Formation Steps
Setting up a limited liability company in Louisiana entails filing LLC formation documents with different authorities, including the Secretary of State, Louisiana Department of Revenue and Taxation, etc. However, while forming an LLC in Louisiana is not complicated, it takes patience to go through all the responsibilities of LLC formation.
Step 1: Choose a Business Name
Applying for a business name is very easy to do, and the process will typically only take a few minutes of your time if you choose to apply for one. You can either go through an attorney or use the Louisiana Secretary of State website directly.
Naming requirements for Louisiana LLCs are as follows:
The name must end with the words "Limited Liability Company" or contain the words "limited liability company" in any combination.
It cannot be deceptively misdescriptive of the nature of your business. Names that are suggestive of other types of businesses you won't be conducting are not allowed under Louisiana law.
Names for LLCs should always avoid using certain words deemed to have a specific legal meaning by state/federal statutes such as a bank, insurance, trust, trustee, etc. It might result in penalties if you use these terms without proper licensing or authority to do so.
Your LLC name has to be unique, and no other business entity can be registered under it. To check the desired name availability, you can search on the Louisiana Secretary of State website. This free service allows you to search for possible conflicts in both registered and reserved names.
Louisiana's Secretary of State Commercial Division is in charge of all LLC naming inquiries and applications. You can reserve your LLC name for up to 60 days and make no more than two 30-day extensions at no additional cost.
You can apply for a business name online by creating a GeauxBiz account, or you can submit your application by mail.
A $25 filing fee is required when you reserve your name, but if you want to speed up the process, you can pay a $30 expedite fee to reserve the name within the same day (24 hours) or pay $50 to have it processed in just 4 hours.
Step 2: Appoint a Louisiana Registered Agent
A registered agent is an individual or business entity who receives the important legal documents for your LLC.
If you are a Louisiana resident, choosing yourself as a registered agent is fine.
Otherwise, it's best to have someone else take on this responsibility so that they can be available at all times of day and night, i.e., during normal business hours.
A registered agent service takes care of accepting your official communications on behalf of your company when you're not available 24/24 hours per day, 365 days per year.
It also provides additional services to make sure that everything runs smoothly, such as:
- Acting as a compliance monitor (i.e., checking up on whether state rules and regulations are followed)
- Payment processing (for tax payments, etc.)
- Recordkeeping (of meeting minutes, annual reports), and more.
A reliable registered agent service in Louisiana can make for a more efficient business since you don't need to be overwhelmed with company maintenance tasks.
Registered agent service is required by business law for your LLC to conduct business legally, although many people think it's not important and opt-out of the service.
Choosing an appropriate, registered agent can go a long way towards ensuring that your affairs are managed without any problems or delays, so it is definitely worth looking into this matter carefully.
There are plenty of options available when choosing who will serve as your registered agent. Some free services provide basic information but charge extra fees if there are additional requests from state authorities, while others offer full management support at competitive costs.
Step 3: File Louisiana LLC Articles of Organization
Your Louisiana LLC can only become officially recognized by the state once it receives Articles of Organization. This file needs to be filled out and filed with the Secretary of State before you can start operating as a business entity.
As an LLC owner, it is your responsibility to file Articles of Organization which include:
- Name of LLC (this should exactly match what was used when filing for other legal documents)
- Principal office address (can also use P.O Box if that's where you'll receive mail)
- Registered agent's and LLC's mailing address (must match their physical street address)
- Information about all individuals acting on behalf of your company like names and titles - here LLC must nominate at least one individual who will act as its representative during this process; there may also be additional representatives or agents whose signatures are required.
The online state filing fees for Louisiana Articles of Organization are $100 and payable to the Secretary of State office in Louisiana.
If you choose to file online, the processing time of your Articles of Organization is 1-2 business days, while paper filing takes 3-7 business days. If you wish to speed up your paper filing, you may pay an extra $30 fee.
Step 4: Make a Louisiana LLC Operating Agreement
Operating agreements are an important part of LLCs in Louisiana. An operating agreement is a written agreement between all members and managers that outlines the procedures and rules for managing an LLC.
It specifies how profits will be divided, what parts of the business each member contributes to (money, property, or work), how much everyone pays in when there are losses, and more.
This makes it easier for businesses to make decisions because they're already laid out by law.
Operating agreements can also help avoid legal disputes if one partner wants to sell their share or another partner isn't pulling their weight with the company workload.
Operating agreements do not need to be filed with any agency; however, we suggest you keep them somewhere where your other valuable documents are because an operating agreement is equally important in the LLC formation process as it is later down the line.
If you don't feel confident writing the operating agreement yourself, contact an attorney or a legal document preparation expert in Louisiana.
Step 5: Open a Business Bank Account
Once you form an LLC in Louisiana, you should open a business bank account for your company.
Any money that comes in or goes out of the LLC must flow through this account, and all expenses should be paid from it as well.
This is important because you don't want any personal funds coming in contact with LLC assets; if they do and something happens (e.g., lawsuit), then someone could come after your personal assets to pay off what's owed.
You can choose which name you would like to use when opening up an LLC bank account: either the full legal name of the company or just its DBA ("doing-business-as") short version—it doesn't really matter either way so long as there aren't two companies operating under similar names within the same area.
Before opening accounts under their business name with banks, LLCs must first obtain an Employer Identification Number (EIN) from the Internal Revenue Service. If you have several LLCs under the same LLC umbrella, make sure each has its own EIN rather than using a single number for all of your businesses.
Step 6: Obtain Employer Identification Number
Employer Identification Number (EIN) is an identification number that the Internal Revenue Service (IRS) provides to businesses and organizations.
The EIN serves as a way for your business to be identified by the government, other companies, banks, and financial institutions.
EIN also goes by the names Federal Employer Identification Number (FEIN), Federal Tax Identification Number, and IRS Business EIN.
LLCs require an EIN in Louisiana if your LLC business makes a profit or plan to hire employees. You will also need an EIN for non-profit organizations located in the state of Louisiana and corporations that foreign persons do not own.
A tax identification number is necessary to secure bank accounts within the state, apply for loans from any financial institution, create payroll checks on behalf of employees, file taxes with both federal and state governments each year, along with other forms that require this information.
You can obtain your EIN through the Internal Revenue Service by filling out a short form for your LLC online. You can request an EIN for free at the IRS website, and it should take just about 15 minutes of time to complete.
Step 7: Obtain Business Licenses and Permits
If you form an LLC in Louisiana, but your services include business transactions, you need to obtain a business license. The same goes for LLCs that operate retail stores or professional services like law firms and medical practices.
Local licenses are available through your parish clerk of court office, where the LLC files its articles of organization.
There is an application form to fill out with information about the members (owners) as well as required fees. You can also lookup this information online by visiting Louisiana's Secretary of State website.
Another set of permits include local business permits, which may be needed if your service requires it, but there is no specific list since every city has different requirements, so check yours first before setting up your LLC.
Federal and state business licenses are also required for certain businesses, but it all depends on what the business is and if any federal or state laws apply.
There are different types of permit requirements depending on which services your business will offer, so check those first before starting an LLC in Louisiana. This is all the more important if you plan on setting up a professional limited liability company in the state.
Related Article: How to Start an LLC in Montana?
Louisiana LLC Taxes
LLCs in Louisiana can choose to be taxed as a corporation, partnership, or sole proprietorship.
Your LLC will be taxed as a corporation if you have filed with the state for this status.
Suppose your business is taxed in any other manner (i.e., it operates without filing to be considered an S-Corp). In that case, Louisiana taxes all LLCs at the same rates that are applied to traditional sole proprietorships based on net income and number of members/owners operating within the company structure.
These taxation structures include franchise tax, withholding tax, depreciation recapture, capital gains tax, and more.
If your business operates a limited liability company in Louisiana, you may be required to file one or more state tax forms. Sales tax is one of the most common forms that LLCs are required to file with respect to their net income if they sell goods.
Louisiana imposes a few different types of taxes for limited liability companies in Louisiana, but they're all very straightforward and easy to understand. Federal and state taxes follow similar guidelines as other businesses operating under S-Corp status (i.e., pay at rates established by your annual earnings).
This includes withholding tax on employees' salaries paid out within the company structure too.
The state taxation laws surrounding LLC filings can vary significantly between states, so it's important you contact an accounting professional when establishing your business if this is something new to you or not clearly defined in the case of law yet.
Self-employment taxes are something you should definitely be aware of if you are considering forming an LLC. If you operate a single-member LLC, you will have to pay self-employment tax.
The rules around operating as a limited liability company in Louisiana can seem intimidating at first glance but once understood, it's easy to see why this structure is common for businesses that want more freedom and flexibility over their operations with the less personal risk involved.
Make sure to contact the Louisiana Department of Revenue (LDR) with any questions about the taxes.
Louisiana LLC FAQs
How Do I Get a Copy of My Articles of Organization in Louisiana?
Copies of records and certificates of Articles of Organization maintained in the Secretary of State's office may be requested through a formal letter to P.O. Box 94125, Baton Rouge, LA 70804, or obtained online through the Louisiana Secretary of State Commercial Database.
Do I Need Business Insurance if I Have an LLC?
Unfortunately, the LLC structure is often only effective when it comes to personal liability protection, and sometimes, even that protection is questionable. With this in mind, your Louisiana LLC may still need its own insurance coverage.
Should I Be My Own Registered Agent for an LLC?
It depends. If you are new to the LLC game, you may want to consider hiring registered agent services because it will save you time and stress.
How Do I Register as a Foreign LLC in Louisiana?
In order to register a foreign LLC, you need to complete the Application for Authority to Transact Business in Louisiana and send it to The Louisiana Secretary of State. The filing fee is $150, and it's payable by mail, fax, or in person.
How Do I File a Louisiana LLC Annual Report?
After you send the initial report, you will have to send an annual report every year before the expiration of your LLC. You can submit the annual report form online with the Louisiana Secretary of State or mail the report.
How Do I Remove a Member from an LLC in Louisiana?
You will have to make an amendment to your LLC's Articles of Organization and, potentially, your Louisiana LLC operating agreement too. You can do this on the Louisiana Secretary of State's website. You might need to contact your lawyer before you can do this. They will help ensure that the process is done correctly.
Can You Change an LLC Name in Louisiana?
Yes, you can change your LLC name by filing a Louisiana Name Change form. Louisiana's geauxBIZ website provides more detailed information on this topic, including what to do after changing your name and the fees for filing a Louisiana LLC name change.
The LLC is a great option for small businesses that want to shield their personal assets from liability.
It's important, however, not to rush the decision and do your research before taking this step.
Once you've done so, we hope this article has helped explain how an LLC can be useful in protecting both your business and personal interests, as well as what steps need to be taken when forming one.