My Journey Through The LLC Creation Process

By JD Austin

GBS205 Section 8064 Extra Credit

The Beginning

My journey through the LLC creation process began in May of 2003. I had been doing Oracle database consulting, Internet application development, and other technical work on a contract basis for years. Being laid off in October of 2001 after the 9/11 attacks convinced me that I should start a business. I found another gentleman that wanted to do the same and began researching what our options were.

After a few days of following google links, I determined that our options were to create a partnership, corporation, s-corporation, or a limited liability company. It didn't take long to rule out partnership as an option once I understood what unlimited liability really meant. All of those years that I had been doing side work, I had really been gambling. One lawsuit could have taken everything I had!

Initially I was convinced that I needed to create a corporation, but soon realized that there was a lot of paperwork and maintenance involved. S-corporations were just a special type of corporation. What really convinced me to go with an LLC was that it was the cheapest limited liability option. Other than the setup costs, no other maintenance was required.

Once I decided which type of company to create it was time to determine what paperwork was involved and find out if the name I wanted was available. The Arizona Corporation Commission web site ( http://www.cc.state.az.us/ ) and secretary of state's web site ( http://www.azsos.gov/ ) had all of the forms needed online.  To find taken business names I used their starpas system: http://starpas.azcc.gov/scripts/cgiip.exe/WService=wsbroker1/connect.p?app=names-report.p

I determined that I needed to file the following paperwork to legally start my business. These actually go beyond the LLC creation into more practical matters.

1. Trademark to protect our logo (notarized)
2. Tradename to protect our name (notarized)
3. Articles of Organization to file for our LLC (notarized)
4. Publication of our Articles of Organization in one of the approved papers.
5. Notice of Publication to the state.
6. SS4 (Federal TaxID number)
7. Business License in the city of operation.

Why File for Trademark And Tradename?

The registration of a trade name (business name, DBA) is not legally required in Arizona, but is an accepted business practice. Trade names, also known as business names or DBA's, can be filed with the Office of the Secretary of State. Our primary reason for filing trademark and tradename with the state was to buy us some time, and to allow us to keep other businesses from using our name or anything close to it or our logo. It may have been possible to skip the trade name and service name if we had wanted to.

Picking A Name and Registering Our Logo

Over the years, I’ve done business under a few different names that all had my last name in them. Now that I had a partner, I wanted to break from that and choose something memorable. We spent more time deciding on a name than we spent filling out the paperwork! The process involved coming up with business names we liked and then looking them up on the Secretary Of State and Corporation Commisson web site to see if they were taken. The third obstacle was that we wanted our web site to match. 

If you’re going to be doing business on the internet, at least check that your desired domain is available before registering your tradename, servicename, and LLC.  Skip the .biz, .info, .org, etc domain names; you want the .com domain.  Godaddy.com is a great place to register your domain and you'll save a bit of money too.  Once you've checked that there isn't another business with that name or one that is very close buy the domain name right away even if you won't be doing anything with it for awhile.

We decided on Twin Geckos Technology Services because of my fascination with geckos and the fact that we looked like we could be related. Be sure to read the trade name handbook on the Secretary of State’s web site before choosing a name. If you find a name that is close to the one you want, avoid it unless you’re in an entirely different field. Even then, it is probably a good idea to add a few words to distinguish your name from theirs.

Articles of Organization

The Articles of Organization are pretty straight forward to fill out. The one topic that confused me was the difference between managers and members. You would think that managers are more powerful than members, but it’s the opposite. Think members are owners and you’ll be fine. Remember to bring three notarized copies of everything and have all of your paperwork with you when you go. Filing the paperwork was fast and easy. I went in person to file the paperwork and was done in under 15 minutes each visit. When they accept your filing for review they will stamp all the copies you provide them with the date. Eventually your document will end up on their web site.

Publication

                I live in Pinal County.  You would think papers such as the Arizona Republic would be where I would publish my Articles of Organization, but that is not the case. There is a list of approved newspapers for each county. Be sure to read it and use one of them for whatever county you are in. Your Articles of Organization must appear in three consecutive publications. When I published mine, they sent me two snippets of the actual listing attached to a form to file with the state.

SS4 – Tax Identification Number

       If you’re going to do business, you need to pay taxes. To do that you need a tax id number. The IRS has made this process as easy as possible by allowing you to apply online: https://sa1.www4.irs.gov/modiein/individual/index.jsp .  At this point you have to decide how you will be taxed. I chose to be taxed as a partnership. Amazingly enough, you get your tax id number in real time! If you're going to hire employees you need to go to the AZ Department of Revenue site to get the appropriate paperwork.

Business License

The final piece of the puzzle is a business license from whatever city you’re doing business in. In my case it is the city of Apache Junction. They also have the forms online. I had to fill out a zoning compliance form as well as an application for a business license. Someone actually called me from the city to ask pertinent questions about how my home based business would be perceived by my neighbors.