How to Start an LLC in Louisiana? (10 Steps Guide)

There are many benefits to forming a limited liability company in Louisiana, but it can also be challenging if you're new to the field.

As someone with extensive knowledge of forming an LLC, I recognize the significance of providing a concise and unambiguous guide.

Following extensive research and thoughtful consultation, I have created a 10-step guide that will enable you to navigate the process effortlessly.

This article includes all the steps of getting an LLC in Louisiana and explains everything you need to know about how they work and how they can help your business grow.

Additionally, these Louisiana professional LLC services offer the convenience of starting an LLC for you.

Quick Summary

• To start an LLC, you must follow specific steps, such as choosing a unique business name, appointing a registered agent, filing Articles of Organization, and obtaining necessary licenses and permits.
• Drafting an operating agreement is highly recommended to define the internal structure and operating procedures of the LLC, even though it's not legally required.
• According to 2020 U.S. Small Business Administration data, the economic landscape in Louisiana is vibrant, with small businesses making up 99.5% of all businesses in the state and employing 53.6% of the private workforce
• I always recommend understanding and preparing for these procedural and financial aspects since it is crucial for a smooth and successful LLC formation in Louisiana.

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How to Form an LLC in Louisiana

Setting up a limited liability company in Louisiana entails filing LLC formation documents with different authorities, including the Secretary of State, and the Louisiana Department of Revenue and Taxation.

However, while forming an LLC is not complicated, it takes patience to go through all the responsibilities of LLC formation.

1. Choose the Type of Your LLC (Mandatory)

In Louisiana, you have the option to choose between different types of Limited Liability Companies (LLCs), each with its own advantages and disadvantages.

• Single-Member LLC: This type is suited for solo entrepreneurs. The advantage is simplicity in management and decision-making, as there's only one owner. However, the downside is limited growth potential and the perception of less credibility with some financial institutions and clients.
• Multi-Member LLC: Ideal for businesses with multiple owners. This structure allows for shared responsibility and potentially more resources and ideas. The disadvantage is the potential for conflicts among members and more complex decision-making processes.
• Manager-Managed LLC: Suitable for owners who prefer not to be involved in the daily operations. The benefit is professional management, but it may lead to less control for the owners and potential conflicts between managers and members.
• Member-Managed LLC: In this structure, all members participate in the business's daily operations. This promotes hands-on management and direct control, but can lead to inefficiencies and conflicts if members have differing visions or skills.

Each type offers a balance between control, flexibility, and potential growth, and the choice depends on your specific business needs and goals.

2. Choose a Name for Your Louisiana LLC (Mandatory)

When choosing a name for your Louisiana LLC, it's crucial to select one that not only aligns with your brand identity but also resonates with and is easily remembered by your customers.

A well-chosen name can significantly enhance your business's visibility and marketability.

"Choosing the appropriate name for your Louisiana LLC entails more than just creativity or branding; it is a crucial process involving adherence to state regulations, confirming availability, and even planning for your online presence in the future"

- Delina Yasmeh, J.D./Tax LL.M, Distinguished Expert in Mergers & Acquisitions

After finding a name, look up a Louisiana LLC name on the Secretary of State’s website to check if the name is available [1].

Here's a short list of guidelines for naming your LLC properly:

• The name must end with "Limited Liability Company" or "limited liability company" combined. It applies to either domestic or foreign corporations.
• It cannot be deceptively misdescriptive of the nature of your business. Names 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 bank, insurance, trust, trustee, etc.
• Make sure you license terms in your LLC name to avoid penalties.
• Your LLC name has to be unique, and no other entity can be registered under it.

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’ll require a $25 filing fee as a reservation cost.

3. Select a Registered Agent (Mandatory)

When registering a business in Louisiana, appoint a registered agent based in Louisiana state to receive your legal and tax documents on behalf of the company.

You can act as your own registered agent for your company, even as a sole proprietorship.

You must meet these Louisiana state registered agent requirements

• Be available during all business hours
• Be ready to receive the legal documents on behalf of your company
• Must have a physical address in Lousiana

A Louisiana registered agent service 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 (meeting minutes, annual reports), and more.

4. File Louisiana LLC Articles of Organization (Mandatory)

Based on my experience forming an LLC, I can attest to the importance of the LLC Articles of Organization in establishing your Louisiana business. This document is the cornerstone for official recognition by the state. It needs to be carefully filled out and filed with the Louisiana Secretary of State.

Articles of Organization 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 agentLLC 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

The online state filing fees for Louisiana Articles of Organization are $100, payable to Louisiana's Secretary of State office. You can either file online or on paper.

Learn more about the cost to incorporate an LLC in Louisiana.

Steps to Take After Forming an LLC in Louisiana

After successfully forming your LLC in Louisiana, there are crucial steps you need to undertake to ensure your business operates smoothly and remains compliant with state regulations.

5. Create an Operating Agreement (Optional but Recommended)

An LLC operating agreement is a written contract between the members of the company. The document specifies the management structure, business operations and all pertinent procedures necessary to run the limited liability company.

The internal document specifies membership rights and duties, ownership percentage, division of profits and losses, as well as outlines the protocols for daily operations, financial management and company amendments.

This makes it easier for businesses to make decisions because they're already laid out by law.

An LLCs Operating agreement 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 for LLCs do not require filing with any agency. Although, you should keep them with other important documents as they are crucial in the business's formation and later stages.

If you don't feel confident writing the operating agreement, contact an attorney or a legal document preparation expert in Louisiana to write operating agreements for you.

6. Apply for an Employer Identification Number (EIN) (Optional, but Recommended)

Applying for an Employer Identification Number is a step I highly recommend for any LLC in Louisiana. This unique number, issued by the IRS, is essential for various business activities like opening a bank account, hiring employees, and handling taxes.

I found the application process straightforward, and having an EIN added a level of professionalism and credibility to business dealings. It also helps my clients in keeping my personal and business finances distinct, which is crucial for liability protection and easier accounting.

You will also need an EIN for non-profit organizations in 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, and 
• File Louisiana business taxes with both federal and state governments each year, along with other forms that require this information

You can obtain your EIN through the IRS by filling out a short form for your LLC online [2]. You can request an EIN for free at the IRS website, and it should take just about 15 minutes to complete.

7. Open an LLC Bank Account (Optional, but Recommended)

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 also be paid from it.

This is important because you don't want personal funds in contact with LLC assets.  The main aim is to protect your personal asset from being at risk.

If you have several LLCs under the same LLC umbrella, ensure each has its own EIN rather than using a single number for all your businesses.

Make sure to open an LLC bank account with the same name you used when your LLC.

8. File Your LLC Annual Report (Mandatory)

My findings show that the annual report filing is a crucial task that should be handled with care and punctuality. Filing your annual report is a mandatory requirement for your Louisiana LLC.

This report, due each year on the anniversary date of your LLC’s formation, is essential to maintain your business's good standing with the state.

The filing fee for the annual report in Louisiana is typically around $30, but it's important to verify the current fee, as it may change. You can check the most up-to-date fee structure on the Louisiana Secretary of State's website or by contacting their office.

The consequences of missing this deadline can be significant, including late fees and potential risks to your LLC's status. To ensure compliance, I always advise my clients to set reminders well in advance of the due date and prepare the necessary documents early.

This proactive approach has been instrumental in keeping their LLCs in good standing and avoiding any disruptions in business operations.

9. Obtain Business Licenses And Permits

If you set up an LLC, but your services include business transactions, you must obtain a business license for LLCs. 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 or court office, where the LLC files its articles of organization.

An application form contains information about the members (LLC owners) and the required fees. You can also look up this information online by visiting Louisiana's Secretary of State website.

Another set of permits includes 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.

Related Articles:

• How to Cancel an LLC in Louisiana
• Louisiana Top LLC Formation Services
• How Long Does It Take To Form an LLC in Louisiana

10. Choosing Your Tax Structure

LLCs can 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 applied to traditional sole proprietorships.

This will be based on net income and the number of members/owners operating within the company structure.

Among taxation structures are: 

• Franchise tax
• Withholding tax
• Depreciation recapture
• Capital gains tax
• Sales tax

If your business operates a limited liability company in Louisiana, you may be required to file one or more state tax forms.

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 within the company structure.

The state taxation laws surrounding LLC filings can vary significantly between states, so you must 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.

Contact the Louisiana Department of Revenue (LDR) with tax questions [3].

Benefits and Drawbacks of an LLC in Louisiana

Benefits:

• Limited Personal Liability: As with LLCs in other states, a primary benefit in Louisiana is the limited personal liability protection. Members are typically not personally responsible for business debts and liabilities.
• Flexible Taxation Options: Louisiana LLCs can choose how they are taxed (as a sole proprietorship, partnership, or corporation), which can be a significant advantage for tax planning.
• Ease of Formation and Maintenance: Compared to corporations, LLCs in Louisiana have fewer formalities and requirements for formation and ongoing maintenance, making it a more straightforward option for small business owners.
• State-Specific Incentives: Louisiana provides numerous business incentives, such as tax credits and exemptions, especially for film, tech, and energy sectors. These benefits are crucial for LLCs, reflecting the state's support for small businesses, which play a significant role in the export sector, contributing to 31.1% of Louisiana's $61.9 billion in export revenue [4]. These initiatives encourage LLC formation and growth, facilitating expansion into global markets.
• A Vibrant Economy. According to 2020 U.S. Small Business Administration data, the economic landscape in Louisiana is vibrant, with small businesses making up 99.5% of all businesses in the state and employing 53.6% of the private workforce [5]. This highlights Louisiana's fertile ground for new LLCs, underpinned by significant incentives for entrepreneurs.

Drawbacks:

• Limited Growth Potential: For businesses looking to publicly trade shares, an LLC might not be the best choice. Unlike corporations, LLCs in Louisiana don't have the option to issue stock, which can limit growth potential.
• Self-Employment Taxes: Members of an LLC in Louisiana might be subject to self-employment taxes on their share of the profits, which can be higher than the taxes on corporate profits.
• State-Specific Taxation: While Louisiana's tax structure can be beneficial in some cases, it might also present drawbacks. For instance, the state's franchise tax, though not applicable to LLCs, could impact decisions if considering converting to a different business structure in the future.
• Varying Local Regulations: Louisiana’s different parishes may have varying local regulations and requirements, which can complicate compliance and operations for LLCs operating in multiple regions within the state.

DIY vs. Professional LLC Formation

When forming an LLC, you have the option to do it yourself or hire a professional service. Understanding the pros, cons, and risks of each approach can help you make an informed decision based on your specific needs.

DIY LLC Formation

Pros:

• Cost-Effective: Doing it yourself can save money on service fees.
• Direct Control: You have complete control over the formation process, allowing for a personalized touch.
• Learning Experience: You gain a deeper understanding of the legal and administrative aspects of your business.

Cons:

• Time-Consuming: It requires significant time to research and understand state-specific regulations.
• Risk of Errors: Without expert knowledge, there's a higher risk of making mistakes in paperwork or missing critical legal nuances.
• Ongoing Compliance: You're responsible for ensuring ongoing compliance with state laws, which can be complex.

Professional LLC Formation

Pros:

• Expertise and Accuracy: Professionals are knowledgeable about state-specific rules, reducing the risk of errors.
• Time-Saving: Outsourcing this task frees up your time to focus on other aspects of your business.
• Compliance Assistance: Many services offer ongoing support for maintaining compliance.
• Peace of Mind: Having experts handle the process can provide reassurance.

Cons:

• Cost: Professional services can be expensive, depending on the provider and package.
• Less Personal Involvement: You might have less involvement and understanding of the finer details of your LLC’s formation.
• Generic Solutions: Some services may offer a one-size-fits-all approach, which might not suit unique business needs.

Choosing between DIY and professional LLC formation depends on individual requirements, such as budget, time availability, legal proficiency, and comfort with handling administrative tasks.

FAQs

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References:

1. https://www.sos.la.gov/BusinessServices/SearchForLouisianaBusinessFilings/Pages/default.aspx
2. https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online
3. https://revenue.louisiana.gov/
4. https://boostsuite.com/small-business-statistics/louisiana/
5. https://advocacy.sba.gov/wp-content/uploads/2020/06/2020-Small-Business-Economic-Profile-LA.pdf