How to Start an LLC in Louisiana
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If you’d like to open a business entity in Louisiana, you should understand all the rules and regulations of the state. Louisiana, because of its French influence, is different from other states when it comes to certain laws, so it pays to do some digging on all the various regulations and mandates. When it comes to forming an LLC, this step-by-step guide will help entrepreneurs get this type of business up and running in the bayou state.
Louisiana is known for Mardi Gras, great food, and bayous but there is so much more to its business climate than those things. It is the state of several large corporations like CenturyLink, Acadia Healthcare, and Ochsner Health System that employ approximately 104,000 people. However, the state has more small businesses than large ones. There are 347,436 small businesses in the state and nearly 94,000 of them have employees. According to federal numbers from 2018, 53.6% of the state’s employment is provided by small businesses. Top industries in Louisiana include chemical, petroleum, and coal industries, and manufacturers. About 30% of the state’s industry is in chemicals and manufacturing, which makes up about one-sixth of the state’s gross domestic product.
Your LLC will get started when you pick some of the basic elements for your business. This includes choosing a name, picking a registered agent, and filing Articles of Organization. These are the first things you will do when you start creating your LLC.
Name your LLC
Have a name in mind for your new business? See if it’s already listed in the state’s business directory.
Picking a name for your LLC is important. You can’t just submit any name you want for a business in Louisiana. The state has some general rules for selecting business names.
The name must be unique
The most important rule is the name you pick for your LLC must be unique. That means it can’t be used by any other business in Louisiana. Additionally, the name you pick can’t be confused with another business name.
Watch the spelling
A business name can’t be similar to another name either, which includes using a similar spelling. In Louisiana, the state also checks both traditional and Cajun spellings as well as pronunciation to determine similarities.
The state also had conditions about certain words used in the name. An LLC owner can’t include words that imply it is a nonprofit or charitable cause. It can’t include the word insurance until it’s an insurance agency or brokerage firm.
Avoid certain words
It can’t include words like bank, savings, safe deposit, trust, building and loan, credit union, or similar words without getting written approval from the Commissioner of the Office of Financial Institutions. An approval letter must be dated less than 14 days before being issued a certificate of organization.
Search for name availability
Starting a search for a business name should begin on the Louisiana Secretary of State’s website. It has a name search tool that is free to use. All you need to do is type in words you want to use or a proposed name and hit search. The tool will generate all the businesses in Louisiana with that name or something similar.
The business search tool can be used multiple times until you get an idea for a unique business name.
Research digital names
Look to see if a matching domain name is available. To provide a consistent experience, the LLC name and your domain name should match.
As you’re conducting name research, consider checking on social media handles too. Many small businesses and sole proprietors are foregoing traditional web pages and using social media pages for their business. You can see if anyone on any of the platforms is using the name you want.
Want to wait to see if the name fits? File a name reservation form to hold a name for 120 days. You’ll pay a $25 filing fee paid to the Secretary of State.
Select a registered agent
Picking a registered agent is another important decision for someone starting an LLC. A registered agent is someone who can collect, sign for, and accept legal documents (like service of process) and other types of mail for the business. Since this is a legal function, it bears some responsibility.
The State of Louisiana mandates that all businesses have a registered agent with a physical address within the state. However, there are a few other rules regarding who can be an agent.
It can be the business owner, a family member, a friend, an attorney, an employee, or someone else.
Louisiana has only three requirements for registered agents:
- The person must be at least 18 years old.
- The person must be a legal resident of Louisiana.
- The person must have a Louisiana physical address, not a P.O. box.
There are registered agent services too. For an annual fee, a professional company will fill this role for your business. Some entrepreneurs prefer this service over servicing as the company’s agent themselves to ease their workload and ensure the documents are received and handled properly.
File Articles of Organization
Those wanting to create an LLC must file Articles of Organization with the Louisiana Secretary of State’s office to become a business. Articles of Organization list the basic facts of the business such as:
- The official, legal business name
- Name of the applicant filing the document
- The applicant’s address, phone number, and email
- The purpose of the business
- How long the LLC will be operational
- Address of the LLC
- The name and mailing address of the registered agent
- The registered agent’s acceptance by signature
- The names and addresses of the first managers
- The management structure
- Other provisions and signature
The Articles of Organization form can be downloaded and printed from the state online site and sent back electronically, by fax, or by mail. Louisiana forms can be difficult to find, but the state created a website so would-be business owners can file forms and keep track of all their tasks in starting a business.
When the Articles of Organization are approved, you’re officially doing business as a recognized company in the state.
You can fill out and submit your LLC formation documents online here.
The State of Louisiana has a fee structure for those seeking to form an LLC. The fee to file a Louisiana Limited Liability Company is $100. The filing fee for what the state calls a low-profit limited liability company is also $100. You can change out your registered agent on documents for $25.
A low-profit LLC (L3C) is defined by Louisiana as a hybrid business structure that combines the ability to earn profits as a traditional LLC provides and the social interest of a non-profit. It could be a company whose primary purpose is a social one while it conducts business and earns profits.
Louisiana processing time
Those who file for Articles of Organization online see their application processed by the state in one to two business days. The state has three to seven business days of processing time for those using paper filing.
You can also expedite your filing for an additional fee of $50 for clerks to process your filing while you wait in a walk-in service or $30 to pick up your business filing certificate within 24 hours.
Create an LLC operating agreement
Louisiana doesn’t mandate that LLCs or other businesses craft an operating agreement to file with the state. However, an operating agreement can protect your limited liability status if your company is ever sued.
It may be required by banks when the company attempts to open a checking account. Even more importantly, an operating agreement protects your startup from state regulations as it takes priority over any state business laws.
The way state business laws work, any issue not addressed in the operating agreement falls under provisions of state law. That makes it highly beneficial for an LLC to have a highly structured and detailed operating agreement.
An operating agreement is a document that outlines how the business is going to operate both daily and under certain unexpected conditions, like the death of one of its members.
An operating agreement should include detailed explanations of issues including:
- What the LLC will be doing as a business focus
- Naming of decision makers and identifying who has voting rights
- Procedure for transferring member interest
- Initial contributions
- The handling of profits, losses, and distributions
- Management methods, structure
- Bookkeeping methods
- Dissolution procedures
Getting your LLC up and running is important. Yet, you can’t skimp on the important details like getting tax structures finalized, understanding when to pay taxes and other fees, buying insurance plans, and filing proper documents. These are key components that are the foundation of a business.
Look to the list below to set up your LLC correctly.
Get your EIN
The Employer Identification Number (EIN) is something the Internal Revenue Service, IRS, requires of most businesses. It’s a business Social Security Number so it can be identified for tax purposes.
However, the EIN is also used on hiring documents, business bank accounts, and loan documents, among other things. It is like a fingerprint for your business so it’s incredibly important.
Business owners claim their EIN by contacting the IRS and applying for one. With online filing, you can have an EIN in your hand within minutes.
There are a few exceptions to businesses getting an EIN. Sole proprietorships, for instance, aren’t required to get one. Other exceptions are organizations that are strictly charitable, religious, scientific, that do public safety testing, are educational, or meet other specific purposes under the IRS code.
You can get your EIN by visiting the IRS website.
Open business bank accounts
Opening business bank accounts is something else an entrepreneur in Louisiana should do. There isn’t a state law that requires businesses to have separate bank accounts, but it’s a wise move to keep money separated in accounts that are strictly business accounts.
A business checking account also helps manage records for both revenue and expenses. It’s a written record for your accountant and can be used as evidence in an audit or for accounting.
A small business with few employees can do well with just checking and savings accounts. However, a growing business should also set up a separate payroll account so money going to employees and employee taxes is held separately from operational expenses.
A growing business also needs a credit card. A credit card with a healthy limit can pay for equipment, inventory, office supplies, or anything that helps run the business without spending what’s in the bank. It can help balance cash flow and pay for emergency things like equipment repair.
Review LLC tax rules in Louisiana
Louisiana is different from many states in how it lists its corporate income. It has graduated corporate income taxes where businesses that make more revenue pay more of a tax percentage than those that don’t.
Louisiana’s corporate tax rate starts at 3.50% and rises to 7.50%. The state also implemented a 4.45% state sales tax. Local entities can tax residents until it reaches the maximum of 7%. The average combined state and local sales tax rate hovers over 9.55%.
The state has some tax and incentive programs. One is the Louisiana Industrial Ad Valorem Tax Exemption Program (ITEP). The program targets manufacturers who agree to provide jobs and payroll to the state.
File an annual report
Louisiana business owners must file the annual report every year by their registration anniversary. Businesses must file the documents on their business anniversary date. The annual filing fee is $30 plus a $5 convenience fee to pay by credit card.
You can file a Louisiana annual report here.
Get insurance for your LLC
Insurance may not be something everyone thinks about but is a necessary item when it comes to business.
Every LLC does have personal liability protection. While that does safeguard personal assets, insurance can provide additional coverage.
Insurances to consider include:
- Liability insurance
- Property insurance,
- Workman’s compensation insurance,
- Fleet vehicle insurance
- Health insurance
Louisiana requires businesses who employ others to carry workman’s comp coverage but there are some exemptions to the rule. It doesn’t require liability or property insurance but also requires commercial vehicles to carry insurance.
In Louisiana, there are stipulations on how much insurance a business can have. For instance, It requires $15,000 per bodily injury liability per person for commercial vehicles. Commercial vehicle insurance must also have $30,000 per bodily injury liability for each accident and $25,000 in property damage liability.
It is a good idea to invest in insurance. It will help businesses meet state obligations and talking about insurance with a neighbor may net you some extra business.
Additional resources to help you set up a business in Louisiana
Starting an LLC isn’t easy but some Louisiana resources will help you get your dream business moving along. Here is a list of some of the organizations that can help.
What types of licenses are required to start a business in Louisiana?
You will need a business license from a local entity like a city or county authority, a state certificate showing you legally formed the business and are in good standing, tax certificates, and any specialized permits or professional licensing.
Are there benefits to starting an LLC in Louisiana?
Some of the benefits of filing as an LLC in Louisiana is that the filing is simple as is management, regulation, administration, and compliance. The fee is relatively low at $100 and filing as an LLC protects personal assets from business debts and liability.
Does an LLC pay federal and state taxes in Louisiana?
An LLC is treated the same in taxation in Louisiana as it is treated by federal income tax officials. That means an LLC that’s taxed as a corporation on the federal level will be taxed as a corporation for Louisiana taxes.
Do LLCs have to file a tax return in Louisiana?
Yes, LLCs in Louisiana have to file for taxation requirements and pay ongoing feeds. LLCs pay federal taxes and state taxes on profits from the business, which are passed through to your personal tax returns. An Annual Tax Statement is also due on or before June 1 yearly.
How do I make changes to my business registration and Articles of Organization in Louisiana?
The state has nothing online for filing amendments or changes to your business documents. Amendments must be legally drafted by the LLC and mailed with the filing fee to the Secretary of State’s office.
Does Louisiana charge a franchise tax?
Yes. All LLCs, be they manager-managed or single-member LLCs, must pay a franchise tax. You can find out more information on rates on the state website.
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