Domestic Limited Liability Company:
What Is It?

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What is a Domestic Limited Liability Company?

A domestic limited liability company is a legal entity that establishes a company within the business owner’s state. Domestic limited liability companies are limited liability companies that register in the state they intend to do business in. Domestic limited liability companies are different than a partnership or sole proprietorship because their registration requirements to become a legal entity are different.

Domestic Limited Liability Company vs. General LLC

Domestic limited liability companies and general LLCs are both incorporation entities that are legally recognized in their states. However, these two classifications of businesses have a few major differences.

Here are some examples of differences between a domestic limited liability company and a general LLC:

  • Business Formation: General LLCs and domestic limited liability companies both have similar requirements when it comes to formation. General LLCs can be filed in any state, regardless of where they are operated. Domestic limited liability companies, on the other hand, must be registered with the Secretary of State in the state where they plan to operate.
  • Bank Account: Domestic limited liability company owners can bank in any state, as long as they are registered with the Secretary of State in the area that they do business. A general LLC, on the other hand, must only have a bank account in the state they wish to register in.
  • Registration: Domestic limited liability companies are registered in and do business in the same state, which means they agree to follow the laws according to that state. Since general LLCs can register in a state they don’t do business in, they must be careful to examine the different laws that might differ from their home state.
  • Record Keeping: State law has specific and stringent requirements regarding record keeping of financial statements for LLC entities. Since both domestic LLCs and general LLCs are both limited liability companies, the record keeping requirements for each are similar.
  • Registration Fees: The fees to file for domestic limited liability company is typically more cost-effective than that of a general LLC since less paperwork is required. Both can be acquired without professional assistance, but forming an LLC sometimes warrants the help of corporate lawyers.

Find out more about the differences and similarities of general LLCs and domestic limited liability limited companies here .

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How to Form a Domestic Limited Liability Company

Forming a domestic limited liability company is a pretty straightforward process. The most complicated part of it is compiling all of the information you need to complete your state’s requirements; once this is complete, the process is a breeze. Some business owners prefer to hire corporate lawyers to form the LLC on their behalf, which is also a great option.

Here is a simple step-by-step guide to how to form a domestic limited liability company:

Step One: Choose a Name

The first step to forming a domestic limited liability company is to choose your company’s name. All of the documents you need to construct and the filings you need to do will require your new name. Remember : this is the name that will tell the world what you want them to know about your business, so choose wisely.

Step Two: Decide Who Will File

Once you decide you are ready to form your new LLC, you have two different options for filing:

  • Self-file
  • File with the help of an agent or corporate lawyer

While filing yourself can save you some cash, consider working with a corporate lawyer instead. Having an expert on your side makes the process easier, and it always helps to have someone to ask when you have a specific question.

Step Three: Construct and File Articles of Organization

Articles of organization are documents that define how your business will run on a day-to-day basis. These legal documents include information how the company will be managed, voting rights, capital contributions, and much more. Essentially, articles of organization can be described as the user’s manual for your new business.

Construct this document with the help of an attorney and file it with your state legislature. Keep in mind that filing these documents is mandatory in all fifty states; you won’t be recognized as a legal business until you complete this step.

Step Four: Make Management Decisions

Any time you form a new company, there are some major decisions that need to be made. Perhaps the most important one is deciding who will run your company. Some LLC founders opt to run the business themselves, but you also have the option of hiring someone to do this.

Deciding whether to have one executive or multiple executives is also an important decision to make. Keep in mind that nothing is set in stone; if something isn’t working, you can always make changes later.

Step Five: Comply with State Rules and Regulations

Once you have formed your LLC, it is vital that you make sure to comply with all state and federal rules and regulations surrounding your industry. Do some research to make sure that you have all the knowledge you need to be in compliance with these rules. If you fail to comply, your LLC could be revoked.

Step Six: File Annual Reports

Annual reporting is a big part of keeping your LLC in business and out of hot water with law enforcement. Most states have a legal annual reporting requirement of some sort, and there are penalties that can be received in the event of a violation. The best rule of thumb to use is to keep accurate, detailed financial records of all the happenings of your company over the course of the year to make filing annual reports easy.

Get more information about how to form a limited liability company here .

Examples of Domestic Limited Liability Company

There are thousands of registered domestic limited liability companies in every state across the country. Understanding what a domestic limited liability company is and how they operate makes it simpler to form your own.

Here is an example of a domestic limited liability company:

  • Georgia opens a business that focuses on renting camera equipment to photographers in her area
  • Georgia decides to register her company in the same state that she operates her business in
  • She registers under the name “Georgia’s Photo Supply” and files required paperwork at her Secretary of State’s office
  • She is granted her domestic LLC name and immediately begins renting her equipment
  • Georgia gets sued by a customer for a supposed breach of contract
  • Since Georgia has a registered domestic LLC, only her business assets can be affected by the lawsuit – her personal assets are protected

Find more examples of domestic limited liability companies by reading this article .

Get Help Forming a Domestic LLC

Are you ready to form a domestic LLC but you’re not sure where to begin? Getting in touch with a professional corporate lawyer is a great option to help you move forward. Post a project on ContractsCounsel today to get connected with lawyers who specialize in the formation of a limited liability company.

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