If you’ve been toying with the idea of forming an LLC, you’re in the right place. First of all, congratulations are in order! Any time someone starts a new business, opens a business in a new state or changes their business structure is an exciting time.
I’ll inform you about everything you need to know about forming a Louisiana Limited Liability Company (LLC). Before we get to that though, I’ll tell you what a Limited Liability Company is and why many small business owners choose to form an LLC instead of a different business entity.
(If you want to skip to the ‘how to form an LLC’ section, click here)
What Is A Louisiana LLC?
A Louisiana LLC is a Limited Liability Company formed in the state of Louisiana that is governed by the laws, regulations, and statutes of the state of Louisiana.
Why choose An LLC?
There are lots of reasons that small business owners choose to form an LLC rather than choosing a different business structure, like a sole proprietorship or corporation. Here are some of the advantages of forming a Louisiana Limited Liability Company (LLC).
1. Limited Liability And Asset Protection
The first reason that many business owners choose to form an LLC over other business entities is personal liability protection and personal asset protection. The owner of a Louisiana LLC can’t be personally held responsible for the debts and liabilities of their Louisiana LLC.
If your Limited Liability Company encounters either financial or legal trouble, the plaintiff or creditor of your Louisiana LLC can’t list your personal assets as a means of financial compensation for the debts owed to them by your LLC in Louisiana. This means that your house, car, boat, savings, or other personal assets are safe, even if your Louisiana LLC is sued or goes bankrupt.
The past couple of years have been eye-opening for Americans. Our nation has seen numerous types of natural disasters, unexpected events, and a worldwide viral pandemic, all of which have really illustrated the fact that even the most well-prepared and successful business can be brought to its knees overnight. Even if it weren’t for natural disasters and pandemics, our economic system is in constant flux which means that no business owner should feel too secure.
This is why small business owners love the personal liability protection afforded to LLCs. Forming an LLC means that if your Louisiana LLC should go out of business, or if you should otherwise lose your business in Louisiana, you won’t also lose your home and your savings. In other words, losing your Louisiana business doesn’t mean that you’ll lose everything when you form an LLC, which makes forming an LLC an attractive option for anyone who values all of the hard work they’ve put into their business.
Another reason that business owners choose to form an LLC rather than choosing another type of business (such as a sole proprietorship or corporation) is the privacy and protection of your personal information that can be achieved when you form an LLC in Louisiana.
If you were to choose another type of business entity, you would be forced to register your name, address, and other information with the Louisiana Secretary of State. The Secretary of State then lists every piece of information that you register with them on their website, which becomes part of the public record. Once it’s on public record, everyone has access to it – even those who would use it for nefarious reasons.
Cyberpunks and scam artists have become adept at their craft during the past decade, which is unfortunate for every business owner (and anyone online, as well). With a few clicks, they can steal your identity using bits of information that you wouldn’t ordinarily think of as sensitive. They can rack up thousands of dollars worth of debt in your name so quickly that you won’t know it’s happened until the damage has already been done.
But when you form an LLC in Louisiana, you have the option to keep your information safe, not register it with the Louisiana Secretary of State, and keep it away from prying eyes that would use it to harm you. All you need to do is hire a Louisiana LLC formation service. An LLC formation service will register their information with the Louisiana Secretary of State rather than your own, so when someone looks up your business name on the Secretary of State’s website the information listed there won’t be traced back to you.
When you use a Louisiana LLC formation service, you retain ownership of your LLC even though they list their information on behalf of your business and your identity will remain safe. This is a win-win situation for LLC owners and it influences the decision to form an LLC for many business owners. The two LLC formation services that I recommend most highly are Northwest Registered Agent and Zenbusiness.
The third reason that many business owners choose to form an LLC is all of the tax benefits that Louisiana LLCs enjoy. The tax benefits that Louisiana LLCs enjoy are most apparent when you compare them to a corporate business structure.
Corporations are subject to something known as “double taxation”. Here’s how “double taxation” works:
The profits earned by a corporation are taxed at corporate rates before shareholders even see them. Then the profits, which have already been taxed once, are disbursed to shareholders as dividends. Dividends are taxed, as well. Therefore, the profits are taxed twice before corporate shareholders receive them.
Forming an LLC is a great way to avoid “double taxation”. Here’s how the profits of LLCs are taxed:
The profits of LLCs are taxed at company rates. Then the profits are doled out to LLC members as personal income. While personal income is taxed, it’s not immediately taxed before LLC members have access to the income. So LLC taxation is obviously different from corporate taxation.
There are even more tax benefits for LLCs.
In 2017 the Tax Cuts and Jobs Act was introduced, and it brought with it the Qualified Business Income Deduction (QBID). QBID is a 20% tax discount exclusively for LLCs.
So not only will your Louisiana LLC never experience “double taxation”, it will get a 20% discount on taxes. This is a great reason to consider starting an LLC in Louisiana.
How To Start An LLC In Louisiana
Now that you know what a Limited Liability Company is, as well as some of the reasons for starting an LLC in Louisiana, here are the steps to form a Louisiana LLC:
*IMPORTANT* If you’re inexperienced with business formation, would like assistance with business filings, or have never formed an LLC in Louisiana, there are professional services to assist you with the process.
They’re called LLC formation services, and they will help you obtain and submit all of the forms associated with LLC formation, as well as help you draft and file your LLC’s Articles of Organization and establish your Louisiana LLC with the Louisiana Secretary of State.
LLC formation services can cost as little as $0 plus any state filing fee you’re charged. However, my favorite LLC formation service is ZenBusiness, which charges $49 plus the state filing fee.
If you’d like to know more about LLC formation services, check out my guide on the best LLC service.
1. Obtain Articles Of Organization Form
The first step you need to complete to form your Louisiana LLC is to obtain a copy of the Articles of Organization form from the Louisiana Secretary of State.
You can get a PDF of the Louisiana Articles of Organization form here.
Because the Articles of Organization is the primary Louisiana state LLC formation document, the following steps will refer to this form.
2. Choose Your Business Name
One of the first pieces of information you’ll be required to add to your Articles of Organization form is your LLC name.
This isn’t as easy as it sounds. You can’t just add any old LLC name here. Each LLC and business in Louisiana are required to have a unique name that differentiates them from other Louisiana state businesses and LLCs. This means that if another business entity is using the LLC name you’ve chosen, you can’t use that name.
It’s not hard to find out if you can use an LLC name though. All you have to do is head over to the website for the Louisiana Secretary of State and perform a search on their Business Filings Database, which you can find here.
It’s important to remember that Louisiana state law requires a Limited Liability Company to include the words “Limited Liability Company” in its LLC name. This can be abbreviated as “Limited”, “Ltd.”, “Co.”, “LLC”, or “L.L.C.”. And if you’re a Low-Profit Single Member LLC, you must include the words “Low Profit Limited Liability Company” in the name, which can be abbreviated as “L3C” or “l3c”.
Suffixes are great to tack at the end of the name of your Louisiana LLC if you’ve discovered that the LLC name you originally chose isn’t available. It’s a bit like adding numbers to the end of an online username.
Once you’ve found an available name for your LLC in Louisiana, you’ll need to file a Reservation of Corporate/ Limited Liability Company/ L3C/ Partnership Name form, which you can find in PDF form here. You can file the name reservation form for your LLC online here, or by mail. You’ll need to pay a $25 state filing fee, as well.
If you don’t like the name for your LLC in Louisiana that you’ve registered with the Louisiana Secretary of State, you can apply to get a trade name, fictitious name or DBA (“Doing Business As”) Name. This is the name for your LLC in Louisiana that you’ll use on signs, websites, advertisements, etc. Here’s the PDF for the Application to Register Trade Name Trademark or Service Mark form, which you can file online here or by mail. You’ll also need to pay the state filing fee of $25.
3. Choose A Louisiana Registered Agent
Under Louisiana state law, all LLCs in Louisiana must have what is known as a “registered agent”, and list the name and address of their registered agent on the Articles of Organization for their LLC.
A registered agent is someone who will become the point of contact for your LLC and receive mail, service of process, and legal documents from official state offices (like the Louisiana Secretary of State) on behalf of your business in Louisiana during regular business hours.
You have two choices when it comes to choosing the registered agent for your LLC in Louisiana: you can take on the role of registered agent for your LLC yourself, or you can choose to use a registered agent service. I’ll go over the pros and cons of each choice so that you can make an informed decision.
If you choose to take on the role of registered agent for your LLC, then you’ll need to be available during regular business hours to receive mail and service of process on behalf of your business in Louisiana. Most LLCs must be open for business during regular business hours and unfortunately you can’t be in two places at once to both serve as the registered agent for your business and also run your business.
If you miss a service of process or important legal document from the Secretary of State while serving as the registered agent for your business, this could result in a default judgment against your LLC that you can’t defend yourself against. It could also mean that the Secretary of State could find your business to not be following registered agent laws that LLCs are required to follow, and you could lose your LLC’s “good standing” status. This means you won’t be allowed to perform business in a legal capacity in the state of Louisiana.
The only upside to taking on the role of registered agent for your LLC yourself is that you won’t have to pay the fees of a professional registered agent service.
Using a professional registered agent service means that you will be guaranteed to receive any correspondence sent to your business, your information will remain safe and off the public record, and you won’t have to try to be in two places at once.
The only downside to using a professional registered agent service is that they charge between $99- $299 per year for their services.
Considering the high stakes involved in assuming the registered agent role yourself, it’s well worth paying the fees of a professional registered agent. In fact, I ALWAYS recommend that new LLCs hire a registered agent service.
If you’d like to learn more about registered agent services, check out my article about the Best Registered Agent Service in Louisiana.
4. Choose Your LLC Address
The next thing you’re required to list on your Louisiana LLC’s Articles of Organization is the address of your LLC’s registered office. This address must be a physical street address within Louisiana, not a P.O. Box. If your LLC does not have an office, then you must use the office of your registered agent or one of the LLC members. If your LLC only has one member and you have chosen to act as your own registered agent, then you will be forced to list your own address when you file your Articles of Organization. This information is then registered with the Louisiana Secretary of State and listed on the public record.
If you’d prefer to keep your name and address off the public record, then it’s worth the investment to hire a Louisiana registered agent service. They’ll list their name and address instead of yours, that way your information remains off the public record and is secure from those who would misuse it. Using a registered agent service can grant you some serious peace of mind when it comes to keeping your personal information safe and secure.
5. Sign And File Your Articles Of Organization
Once you’ve filled out your Articles of Organization and triple-checked the forms for accuracy, the final step of the LLC formation process is to sign and file the Articles of Organization for your Louisiana LLC with the Secretary of State.
LLCs located within Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, and Terrebonne parish then you’ll need to file your Articles of Organization for your LLC online. Otherwise, you can file the Articles by mail. If you’re filing by mail, send the necessary documents to the following address:
P. O. Box 94125
Baton Rouge, LA
When filing online, be sure to include your LLC’s tax treatment (Sole Proprietor, Corporation, or Partnership), the name, address, purpose, and mailing address if different from your LLC’s office address. You’ll also be required to list the name and address of your registered agent, the LLC’s federal EIN, the LLC’s managerial structure (member-managed or manager- managed), your LLC’s NAICS code, the names and street address of your LLC’s members or managers, and the signature of your LLC’s organizer, a member or a manager. If you file online, this will be an electronic signature, otherwise all of the signatures on your Articles will need to be notarized before filing with the Louisiana Secretary of State.
If you’re filing a paper application via postal mail, then you’ll need to include a few other pieces of information, like your LLC’s duration, as well as your Initial Report form. The Initial Report will be covered below.
Other LLC Activities
The Articles of Organization isn’t the only form you’ll need to fill out when forming your Louisiana LLC. There are many other activities that your LLC must complete to ensure you remain in good standing with the Louisiana Secretary of State.
First, your LLC will need to file an Initial Report. This document must accompany your Articles of Organization when filed and should include most of the same information you collected to file your Articles. The Initial Report is only required if filing by mail, so if you choose to file online you don’t need to worry about this form.
If your LLC is located outside of Louisiana, then your LLC must follow the process for establishing a foreign LLC. Foreign LLCs follow a mostly similar formation process to domestic LLCs, except you will also be required to submit an Application of Foreign Limited Liability Company. LLCs with offices in the following parishes must file the application online, otherwise, you may file online or by mail: Ascension, Bossier, Caddo, Calcasieu, East Baton Rouge, Jefferson, Lafayette, Livingston, Orleans, Ouachita, Rapides, St. Tammany, Tangipahoa, and Terrebonne
You’ll also need to look into any state and local business licenses and permits LLCs may require in order to ensure your business stays in good standing with the Louisiana Secretary of State. You can find more information on state business licenses and permits via the Louisiana Secretary of State geauxbiz website. For local licenses, check with the city or parish if your LLC is in an unincorporated area.
All LLCs operating within Louisiana are also required to file an annual report every year after your LLC is organized. Your LLC Annual Report is due by the anniversary date of your LLC’s formation, so if your LLC was organized on October 1st, 2021 then your annual report would be due by that exact date each subsequent year. You can file an annual report online or by mail, and the filing fee is $30.
If your LLC has employees or will be collecting sales tax, then you’ll also need to register with the Louisiana Department of Revenue. If you’ve chosen to file your Articles of Organization online then you can register with the Department of Revenue at the same time. You can also file online via their website here or file an application by mail. If filing by mail, you can obtain a copy of the necessary form here. If you have employees, you may also be required to register with the Louisiana Workforce Commission, which you can do through the geauxbiz website.
If all these business filings and paperwork for your annual reports, tax documents, business licenses, and permits seem overwhelming, there are professional services available to help you. A Louisiana PEO service can assist you with filing some of your documents and online legal services can also provide assistance.
Louisiana LLC Fee Summary
One of the most frequently asked questions in regards to LLC formation is “How much does it cost to form an LLC in Louisiana?”. This is a good question. No matter whether you choose to use an LLC formation service or form your LLC on your own, you’ll encounter several fees and taxes. Here is a look at some of the state filing fees and tax requirements you should expect to encounter.
Articles of Organization filing fee: $100
Name Reservation filing fee: $25
Registered Agent Fee: $99-$299
Annual Report filing fee: $30
State Personal Income Tax: 2%-6%
State Corporate Income Tax: 4%-6%
After Starting Your Louisiana LLC
Congratulations! You’ve filed your Articles of Organization and Initial Report and have completed the first steps to forming your Louisiana LLC. Take some time to celebrate this victory with a weekend trip or a dinner party with your friends, family, or business partners. But don’t take too much time off, because there are still a few other activities you’ll need to complete to ensure that your Louisiana LLC is in good standing.
Step 1. Create An Operating Agreement
Louisiana doesn’t place any legal obligation on LLCs to draft operating agreements, but it’s still in your business’s best interest to do so.
Without an Operating Agreement, your LLC will be governed solely by Louisiana LLC law and your business will lack a clear set of rules and guidelines for many situations. The default regulations in place may not be ideal for your business or may not cover every situation you could encounter during your business journey.
To better illustrate the importance of the LLC Operating Agreement, think of your business as a computer. The LLC would act as the case, protecting the hardware and other vulnerable pieces from the elements. The Operating Agreement acts similarly to a computer’s operating system and provides instructions for how the different departments, members, and managers of your LLC interact with each other and outlines their tasks and responsibilities. A computer without an operating system can barely do more than turn on, and an LLC without an Operating Agreement faces similar challenges. Without a clear set of guidelines and procedures for daily operations, it can be hard to start your business and hinder your growth.
*IMPORTANT* Before drafting the Operating Agreement for your LLC, it’s crucial to determine whether you will be using a single-member, multi-member, or manager-managed managerial system for your business. Multi-member systems use a voting system to make these decisions, and a manager-managed system grants that authority to managers hired by you or other LLC members. A single-member system assigns that level of authority to one person, typically the LLC’s organizer or sole member. If you choose to use managers in this way, make sure they are well qualified and trustworthy.
When drafting your LLC Operating Agreement, it’s important to ensure you make your instructions clear and precise. Poorly written or unclear Operating Agreements can create confusion and conflict between the various aspects and members of your LLC and make it difficult for your business to grow. A well-written agreement should begin by listing the LLC members, along with their responsibilities, shares of the profits and losses, and how much authority they have within the LLC. You should also list the responsibilities, interactions, and authority of each manager and department if applicable to your LLC.
Well-written Operating Agreements should also include procedures and contingencies for LLC members leaving the business or onboarding new LLC members or managers. A poorly written Operating Agreement may lack clear instructions and create internal conflict and confusion between members or managers when you encounter situations like these. Poorly written Operating Agreements can also hinder your growth in other ways, such as failing to include procedures on how vital departments are supposed to interact with each other or an unclear hierarchy of authority or division of responsibilities between members.
As you can see, it is very important to ensure that your business has a well-written Operating Agreement with clear and detailed instructions, procedures, and contingencies for your LLC’s daily operations.
If you’ve never drafted an Operating Agreement before, there are professional services available to assist you.
Many LLC formation services offer assistance with your Operating Agreement as part of their business services, and Northwest Registered Agent provides a free template via their website. If you just need help with the wording of your Operating Agreement, then consider subscribing to an online legal service to ensure you get it right the first time.
Step 2. Apply For An Employer Identification Number
If your LLC has employees, collects sales tax, or has multiple members, you’ll also be required to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Even if you don’t need one, it may still be a good idea to apply for an EIN for tax purposes.
An Employer Identification Number (EIN) functions similarly to a social security number and identifies business entities for tax purposes. An EIN will also allow your business to qualify for some licenses and permits only available to LLCs with an EIN. If your LLC has only one member and you have chosen to be taxed as a corporation, your LLC must file an application for an EIN as well.
You can apply for an EIN from the IRS via their website here, and EIN applications can be submitted anytime.
Step 3. Open A Business Bank Account
One of the most important steps to ensure you start your business off on the right foot is opening a business bank account. Unfortunately, this step is also one of the most overlooked by first-time business owners and it’s easy to see why. Many new business owners believe that it’s simpler to use their personal bank account as their business bank account, but operating your business this way can create more problems than it solves.
To start, using your personal bank account for business transactions makes your tax paperwork harder when it’s time to file your income tax papers. Unless you keep a detailed ledger with a comprehensive list of every business transaction process through your account, it can be incredibly difficult to sort through that information when tax season approaches.
Operating your business in this way also puts your personal finances at risk if you become involved in a lawsuit or other legal trouble. The Personal Liability and Asset Protection that many LLC owners enjoy may not apply when you share your personal bank account with your business, which means that you risk losing your personal finances should your LLC become involved in legal trouble or litigation. This is partly because operating your business in this manner makes your LLC appear as though it is not a separate entity from you, and that means your finances wouldn’t be protected. In extreme cases, this can cost you the entirety of the protection and you could lose personal assets too.
Fortunately, opening a dedicated business bank account is relatively simple. Most banks require a “bank kit”, which is a collection of documents that should include certified copies of your LLC paperwork that you’ve been filing so far. You’ll also need a copy of your LLC’s Operating Agreement and your EIN, if applicable.
Many LLC formation services will assemble your bank kit as part of their services, making this part of the process simple for you.
The decision to start an LLC in Louisiana is a monumental step forward for your business, so congratulations!
If you choose to form an LLC without using an LLC formation service (which can cost as little as $0 plus state filing fees), here are the steps you’ll need to take to form an LLC yourself:
- Obtain the Articles of Organization form from the Louisiana Secretary of State,
- Find and reserve a name for your LLC,
- Appoint and list a registered agent for your LLC with the Secretary of State,
- Choose which address to list for your LLC, and
- Sign and file your Articles of Organization.
Forming a Louisiana LLC on your own can seem like an impossible feat to accomplish. It’s easy to become overwhelmed and fed up with all of the forms you must file, filing fees, legal jargon you have to learn, and everything else associated with LLC formation in Louisiana. But if you get through it all, there’s nothing that compares to the feeling of accomplishment you’ll be rewarded with, so it’s well worth all the effort.
Congratulations on your decision to form an LLC in Louisiana, and best of luck as you start your business journey!