Are you looking to form a limited liability company (LLC) in the state of Louisiana, but you’re not sure how the formation process works? There are several important steps when it comes to creating a Louisiana LLC that is compliant and able to do business in the state.
What is a Louisiana LLC?
The Louisiana LLC is one of the most popular business structures in state. It's a more casual and flexible type of business than a corporation, but includes the same personal asset protection you get with a corporation. That means you aren't personally liable for debts or lawsuits against your business. This is a critical protection that is lacking from sole proprietorships and general partnerships.
LLCs in Louisiana have simple formation and maintenance requirements, several options for how they can be taxed, and flexible management. From one-person businesses to multi-member LLCs with several owners, the LLC is a popular choice for a reason.
Forming an LLC in Louisiana (in 6 Steps)
Step One) Choose an LLC Name
Your LLC’s name is often the first impression you get to make on potential customers, and therefore it goes without saying that this is an important step. There are a few different aspects to take into consideration when selecting a name for your business:
Legalities: In the state of Louisiana, every limited liability company is required to have either the initials “LLC” or the phrase “limited liability company” in the name. In addition, you cannot include any words that refer to other business types (like “corporation” or “incorporated”), and you also can’t use words that are typically used to refer to specific kinds of businesses (like “bank” or “law office”).
Explanatory Naming: Another aspect to consider is including language that explains what your business does ― for example, if you’re a plumber, put the word “plumber” or “plumbing” in your LLC name. Additionally, if your business has strong values like being environmentally friendly, you can indicate that by including the word “green.”
Do You Like It?: At the end of the day, this is your business, and you should choose a name that makes you proud. You should also make sure your LLC name both sounds good when spoken out loud, and looks good when written down.
The most important consideration for naming an LLC is to not get too attached to any one business name until you have either reserved the name with the state of Louisiana, or you’ve officially formed your business. If you’re not sure whether or not your name is still available, you can search your desired name at this link; if no results pop up, then your name is still available. If you’re not yet ready to form your LLC, you can reserve your desired name with the Reservation of Corporate/Limited Liability Company/L3C/Partnership Name form.
Step Two) Designate a Registered Agent
Every LLC in Louisiana is required to designate a registered agent, which is the individual or registered agent service that receives government correspondence on behalf of your business, then forwards those documents to you.
According to the Louisiana Secretary of State,
All business registrations with the Secretary of State require, by law, an agent with a physical address in Louisiana. An agent, or as it is sometimes called, registered agent, can be almost anyone of legal age and a legal resident of Louisiana. An agent is someone that is designated to receive legal documents served on the business in the event of administrative or legal action. An agent has an obligation to forward the “legal documents” to the business.”
Without a registered agent, you could lose your good standing with the state of Louisiana, and the state also has the right to dissolve your LLC if they decide to. In a worst-case scenario, the state could fail to alert you regarding a lawsuit against your company, which could even lead to a judgment against your business because you didn’t defend yourself.
Our Recommendation: At the end of the day, we recommend designating a Registered Agent service to handle these requirements. Doing so will help eliminate junk mail and more importantly, keep your personal and/or business address off public record. Incfile and Northwest Registered Agent both offer a free Registered Agent service when you utilize their services to form an LLC. Both are fast and affordable. In fact, they’re the best available.
Step Three) File Formation Documents with State
Once you are ready to form your Louisiana limited liability company, you will fill out the articles of incorporation.
This is THE document that will register your LLC with the state. You’ll want to ensure all of the following information is correct on the form:
- Your chosen business name
- Name and address of your registered agent
- Management style (member-managed or manager-managed)
- Name(s) and address(es) of the LLC’s manager
- Name and address of the LLC’s organizer
- Signature of organizer and registered agent
- Effective date
Cost to Form an LLC: The state of Louisiana charges a $100 fee to form an LLC.
Processing Time: It takes up to seven business days for the state to process your mailed Louisiana LLC formation paperwork and get your finalized documents in the mail to you. However, most filings that are completed online are finalized within a 2-day turnaround. Please note that the estimate of business days begins once ALL required paperwork is in order and filed correctly.
Step Four) Create an Operating Agreement
After you register an LLC in Louisiana, create a detailed outline that explains how you will run and manage your new business. Even though it doesn’t need to be filed with the state, put one together and keep it for your records.
When you open a bank account, you may be asked for this document in order to open an account. You’ll also want to keep in mind that any future business partners or managing members may also be interested in seeing your Operating Agreement before joining your company. After all, this document essentially serves as your overall plan for success.
An attorney can help you outline your Operating Agreement or create one from a free template online. You can read more about Operating Agreements here, but some of the basic information you’ll want to have includes:
- Individual members' ownership percentages
- Rights and responsibilities
- Voting powers and meeting guidelines
- Allocation of profits and losses
- Management rules for the LLC
- Provisions for buying a member owner out, or transferring their shares in the case of illness or death
Step Five) Handle Taxation Requirements
The vast majority of LLCs require a federal tax ID number, or EIN. An EIN is basically the business version of a social security number, and it’s used for a variety of important LLC functions.
For instance, you’ll need an EIN if you want to hire any employees, and many banks require them to open business bank accounts as well. You’ll also need one for tax purposes, hence the name federal tax ID number. Get an EIN for your LLC for free through the IRS.
When it comes to state-level LLC taxes, Louisiana levies these taxes based on the nature of your business. The most important of these is income taxes. If your LLC is considered a pass-through entity—usually a sole proprietorship or partnership—you’ll pay income taxes on your individual tax returns. However, LLCs which choose to be taxed as corporations will be subject to the state’s corporate income taxes. You can learn more about Louisiana’s corporate income taxes here.
In addition to the income tax, sales taxes are another common requirement for businesses. If your LLC will be involved in the sale of qualifying retail goods, rentals, or temporary lodging, you’ll need to collect and pay sales tax to the state. To do so, you’ll need to apply for a sales tax certificate. As of 2019, the Louisiana sales tax is 4.45%. You can learn more about the state’s sales taxes here.
LLCs with employees are also subject to a few other taxes. The most common of these is the withholding tax; essentially, with this tax, you’ll keep back a small portion of the employee’s paycheck and forward it to the state. You can consult this FAQ on withholdings to get a better understanding of this tax. Employers are also required to pay unemployment insurance taxes—even though it’s called “insurance,” this state program is funded by taxes on employers. You can learn more about an employer’s obligations for unemployment insurance here.
Finally, you may need to pay some industry-specific taxes depending on the nature of your business. From fuel taxes to excise taxes for hazardous wastes or wines, Louisiana has a wide variety of unique taxes that you may need to pay. You can browse a listing of taxes important for Louisiana businesses here.
Dealing with taxes can be a little overwhelming, especially with so many different forms to file. To make the process a little easier, Louisiana has an online taxpayer portal, LaTAP, which can help streamline your taxes.
Depending on where in Louisiana your business is located, you could also need to pay some local taxes. The most common local tax is your property tax; your local property tax assessor will be able to help determine the amount you’ll owe for this local tax. And in addition to those taxes, Louisiana permits that each county (also called a parish) can impose additional sales tax: up to 7%. You can learn more about tax rates for your county here.
Step Six) Obtain Business Licenses and Permits
The state of Louisiana does not have a general business license that each LLC needs to acquire in order to do business.
However, Louisiana upholds the licensure required by the federal government for certain occupations, including agriculture, aviation, and more. Please consult the Small Business Association’s listings for federally-regulated industries requiring licensure.
And much like the state has industry-specific tax requirements, it also has licenses and permits that are required for businesses in certain industries. Louisiana has dozens of these licenses, so there’s a good chance at least one of them applies to your LLC. These licenses can range from anything to attorneys to florists to surveyors. You can consult this list to see what licenses might apply to your business. The state also provides a Business License Checklist through geauxBIZ, a resource which can help you get all your licensing requirements lined up in one place.
Would you prefer to have a professional form your LLC?
If you would prefer to have a professional handle the paperwork for you, consider hiring an online incorporation service like LegalZoom and Incfile. To see which is the better option for you, check out our side by side comparison.
Next Steps: What to do After Creating a Louisiana LLC
Open a business bank account: We highly recommend that you establish a separate business banking account so that your business and personal finances are maintained completely separate. This is important because it helps protect your personal assets and also makes filing taxes much easier. Once you receive your EIN from the IRS, you’ll be able to use it to establish an account at the bank or credit union of your choice.
Get Business Insurance. Every Louisiana business with employees is strictly required to acquire workers’ compensation insurance. For more information on this policy, check out the Louisiana Workforce Commission. Essentially, this policy helps provide a portion of normal wages to an employee in the event they cannot work due to a work-related injury or illness. After you obtain these legally required policies, it’s probably also a good idea to pursue general liability insurance, as well as some industry-specific policies.
Understand income reporting. Income reporting is just what it sounds like – reporting the income you made from your business. It’s important to note that you must file this form whether you made or lost money over the course of the year. The form you’ll file to report your income as part of the taxation process depends on the format of your business; you can find those forms here.
Understand annual reporting. Louisiana requires that all LLCs file an annual report. You can file it online at geauxBIZ. Your annual report will essentially serve to update the state on any pertinent information regarding your business that has changed over the course of the year.
Find an accountant. We don’t recommend that you attempt to manage your business finances without the help of a professional. There is too much room for error, and a professional can ultimately save you time and money by guiding you on how best to manage your business finances. At a minimum, enlist professional help to set you up with software and the steps for keeping up with your finances on a regular basis. Then, consult back with your accountant at least a couple of times per year – and especially at tax time – to ensure you’re keeping track of everything correctly.