How to Form an LLC in Louisiana: The Affordable Way

Have a new business idea that you want to introduce to the market in Louisiana? Forming a company is the first step toward making your business an official entity in the State. There are many types of companies, of which a Limited Liability Company, or LLC, allows you to enjoy tax benefits and operational flexibilities.

Louisiana has its own set of rules and regulations for forming an LLC. Not filing your LLC’s annual report for three years in a row could result in its immediate dissolution.

Missing any step or making a mistake could force you to start the whole process again. Consider this article your friendly guide to forming your LLC in the State.

Name Your Louisiana LLC

Naming your LLC is a simple yet crucial step in the process of formation of your company. The name you choose must be creative and distinguishable from the names of other businesses registered in Louisiana.

The name you choose is your identity. Your LLC’s name is how your customers and your competitors come to know of your presence. Building a unique brand is the only way to be remembered in an ever-growing market. For this, a catchy name is a must.

While naming your LLC, you must follow all the guidelines the State of Louisiana has laid down.

Naming Guidelines

The naming guidelines of Louisiana are straightforward. While deciding on a name for your business, you must keep in mind the following:

The name of your LLC must end with the phrase ‘Limited Liability Company’ or one of its abbreviations (“LLC” or “L.L.C.”).

The name you choose should not resemble the name of any existing entity that has been permitted to conduct business in the State. The difference cannot be through the mere use of designators such as plurals or prepositions. For instance, Wild Flower LLC and Wildflowers LLC.

Your LLC’s name should not imply affiliation with a government agency. For instance, you cannot name your LLC ‘Capable Insurance Agency’ and abbreviate it as CIA. 

You cannot include restricted words or professional titles (doctor, attorney) without prior permits. The use of professional designations (like “Attorney”) would also require such professionals to be part of your company. (Do go through the list of restricted words)

To get a deeper understanding, you may read the naming conventions in Louisiana.

Does Your Business Require a DBA?

A Doing Business As Certificate, or DBA, is an optional document that allows your LLC to conduct its business under a different name. It will also come in handy if you wish to branch out your business into various fields in the long run. In Louisiana, a DBA name is referred to as a “Trade Name.”

But remember, a DBA name is best used for branding purposes and cannot protect your personal assets. To avail of the benefit of limited liability, you must register and form an LLC.

Doing the Name Search and Name Reservation

Before finalizing a name, you have to ensure that you choose a completely different name from other entities in the State. This ensures that there is no multiplicity of steps and that your Articles of Organization are completed in one go. You can run a name search using the State’s Business Filings Search portal.

Apart from this, you might also want to consider doing a trademark and social media search before finalizing your LLC’s name. These steps will help you understand if your name is genuinely unique and distinguishable.

You can reserve a name for up to 120 days in Louisiana for a fee.

Register Your Business Domain 

You might not immediately want to move your business online. But in an increasingly digitized world, it helps to have an online presence. So it’s best to get your domain name registered so that the option is available to you at any point. Check to see if your chosen name is available as a web domain. 

Choose a Registered Agent in Louisiana

A registered agent is an intermediary who will be the point of contact between the State and your LLC. 

Let’s discuss our friend, John. He wants to form an LLC in Louisiana to sell stationery. Unfortunately, John often stays very busy handling the business requirements and travels a lot to meet investors and suppliers. How will John look after all the paperwork and legal issues with such a busy schedule? This is where a registered agent comes into play. 

The registered agent is responsible for receiving all official communications for your LLC. The registered agent you choose will have to consent to perform such functions for you because their name and address will be filled in the Articles of Organization and be available in the public domain. In Louisiana, through 2014 Louisiana Laws Revised Statutes RS 12:1308, it is mandatory to appoint a registered agent for your LLC. 

Who Can Be a Registered Agent

Louisiana has certain requirements for the registered agent for your LLC.

The agent you select for your LLC must be:

• An individual State resident who is above the age of 18 years or
• A business entity that has obtained authorization to conduct business in the State.

The registered agent should have a physical street address in the State and be available during business hours on all working days.

You can appoint yourself, a friend or family member, other members of your LLC, or even another business entity as your LLC’s registered agent.

Individual v. Registered Agent Service

While it may be cheaper for you to be the registered agent or appoint a friend or family member, seeking professional help comes with its benefits. By selecting a registered commercial agent, you will be free to concentrate on your business.

You will also be able to travel without worrying about missing any communications your LLC will receive. A commercial registration will ensure that your LLC is up to date with the paperwork and avoid any unnecessary legal liabilities/costs.

The registered commercial agent will store and maintain all your essential documents online to provide easy and instant access to them. This helps keep your work organized and makes it easy to access your LLC’s documents as and when possible.

Registered agent services are experts in their field of work. They bring in the expertise gained through experience to your LLC. If you appoint a registered agent service, your address will not be present in public records, helping you protect your privacy.

Filing the Articles of Organization with Louisiana

Articles of Organization is a legal document needed to form your LLC. The laws in Louisiana mandate that your LLC file this document with the office of the Secretary of State.

The names of your LLC and your registered agent are registered with the State along with the Articles of Organization. Once this is done, your LLC will officially be incorporated into Louisiana’s records and gives it a legal presence.

Your Articles of Organization should lay down the following information:

• Your LLC’s Name
• Your LLC’s Purpose
• The Duration of the LLC (can be marked as perpetual)
• Your LLC’s Registered Office
• Your Registered Agent’s Name and Address
• The LLC’s First Member/s’ Name and Address

Expedited Filing

It usually takes the state 3-5 business days to process your Articles of Organization. But, for an additional $30, they will process your Articles of Organization within 24 hours. There is also an option to pay $50 to get your application processed within 2-4 hours.

Publish Notice of Formation

Louisiana does not require you to publish a notice of formation.

Create an Operating Agreement for Your Louisiana LLC

An Operating Agreement clarifies aspects of the company’s day-to-day functioning, such as profit sharing, responsibilities of the members, etc. You can think of it as a contract between your LLC members, facilitating your LLC’s clear, smooth, and effectual functioning. 

Although drafting an operating agreement in Louisiana is not mandatory, we encourage you to do so. There is no fixed format for this agreement.

You have all the freedom to include in the agreement provisions that you feel are necessary for your LLC (as long as it is not illegal or disallowed by law).

An Operating Agreement is an essential document even if you are a single-member LLC. It proves credibility during court cases, business expansions, and while obtaining permits.

Here are some of the important and commonly included terms in the Operating Agreement:

• Date of formation of the LLC.
• Name of the LLC.
• Domicile of the LLC.
• Name, address, and contact details of the members.
• Purpose of the LLC (It is desirable to mention a general purpose to ensure your functioning isn’t restricted).
• Duration of the membership.
• Capital contribution by each member.
• Interests of each member.
• Responsibilities and other liabilities of each member.
• The profit-sharing ratio between the members.
• Terms regarding transfer and withdrawal of power.
• Terms for Dissolution of the LLC.

The operating agreement is not limited to these terms; you have the freedom to tailor your LLC’s operating agreement as per its requirements.

Writing an Operating Agreement Yourself v. Hiring a Service

While you can always choose to draft the operating agreement yourself, consulting with a professional has many benefits.

Your LLC could require a more complex operating agreement, or you may not be confident in drafting it yourself. Commercial registered agents also offer services to prepare your LLC’s operating agreement.

Limits of the Operating Agreement

The operating agreement cannot excuse you from the laws of Louisiana. Regardless of the terms, you set in your LLC’s operating agreement, members and employees are still liable to pay whatever tax they owe and are required to operate within the laws of the State.

Obtaining an EIN for your Louisiana LLC

An Employer Identification Number (EIN) is used for tax administration purposes by the IRS. Your LLC will need an EIN for opening a separate business bank account, applying for certain business loans, obtaining licenses, and managing employee-related matters. 

Though not compulsory, you will need an EIN if you fall under any of the categories stated below

• If you are a multi-membered LLC.
• If your single-membered LLC chooses to be taxed as a corporation or an S Corporation. 
• If your single-membered LLC has an excise tax filing requirement or an employment tax filing requirement.  

You may apply for an EIN online, or alternatively, you may apply for it through mail also. The IRS does not charge you for the same.  

File Annual Reports in Louisiana

An annual report is a document used by the authorities to get the latest and updated information about all the business entities operating in the State. It has to be filed annually with the Secretary of State of Louisiana.

The due date for filing is the date of formation of your LLC every year. So, for example, if you formed your LLC on 15th March 2020, your due date to file the Annual report will be on 15th March 2021.

Not filing your Annual reports on the due date does not attract any fines, but a failure to comply for three consecutive years will cause the State authorities to shut down your business.

You can file your Annual Report online, or you may get a print of the form online and mail it to the office of the Secretary of State. The filing fee is $30.

Tax Liabilities for Your Louisiana LLC

The way your LLC will be taxed depends upon the number of members in your LLC. There are four ways in which LLC will be taxed:

• Sole proprietorship: a business owned by a single person
• Partnership: a business owned by multiple people
• C – Corporation: income is split or segregated for taxation
• S – Corporation: tax liability is split between the business and its owners

Federal Tax Liability

If your LLC is filing its taxes as a sole proprietorship, you will have to report your business activities to the IRS under Schedule C, Schedule E, and Schedule F of Form 1040. 

To be taxed as a partnership, apart from filing Form 1040, you’ll have to file your partnership return under Form 1065 and provide information about each member under Section K-1 of the form. 

If you wish your LLC to be taxed as a C-Corp, you can file its taxes under Form 8832; you would file under Form 2553 to have your LLC taxed as an S-Corp.

Apart from this, you must pay Federal self-employment tax (presently 15.3%) on the profits you take from your LLC.

State Tax Liability

In Louisiana, if your LLC sells any goods to consumers in the State, you will be liable to pay Sales and Use tax. For this, you have to obtain a seller’s permit.

Miscellaneous Tax Liability

Apart from the Federal and State taxes, your LLC might be required to pay certain other taxes, depending on its functioning and type. 

Your LLC will also have to pay employer taxes if it hires employees. Therefore, you must sign up for Unemployment Insurance Tax and Employee Withholding Tax.

Permits & Licenses

It is essential to determine if your business operates in an industry that requires licenses and permits on a federal, state, or county level. 

Federal Licensing requirements will depend on the business activity carried on by your LLC. If your company is engaged in any area of business regulated by the Federal Government, you will be required to obtain relevant Federal Licenses and Permits.

Some business activities requiring Federal Licenses and Permits are 

• Agriculture
• Alcoholic beverages
• Aviation
• Firearms, ammunition and explosives
• Fish and wildlife
• Commercial fisheries 
• Maritime transportation
• Mining and drilling
• Nuclear energy
• Radio and television broadcasting
• Transportation and logistics

At the State level, you will need a seller’s permit if your LLC is selling any specified product or service that is subject to sales tax. You can visit the website of Louisiana’s Department of Revenue to obtain this permit.

Additionally, certain professions are required to get a separate State license. You may refer to the State’s geauxBIZ website portal to understand the State Licensing requirement for your LLC.

Depending on where you operate your business, you may also be required to get the local government’s license and permit. In New Orleans, businesses are required to have an Occupational/General business license. To know more about local licensing requirements, get in touch with the office of your local government administration.

Business Bank Account & Phone Number

Consider opening a separate business bank account for your LLC. This ensures that your assets are not attached to the LLC in case of insolvency or lawsuits. Having a separate bank account qualifies your LLC for several loans, permits, and licenses.

Having a separate phone number is equally important. It provides a specific contact mechanism for your LLC’s customers. Most network providers offer business/enterprise plans; check to see which suits your LLC the best.

Final Thoughts

Setting up your business in Louisiana has a lot of benefits. The State has a strong infrastructure set up and a skilled workforce. The State offers many attractive incentives aimed at promoting small and medium enterprises.

The Louisiana Industrial Ad Valorem Tax Exemption Program (ITEP) and the Small Business Loan and Guaranty Program are two such incentive schemes. Get in touch with your local county or city government office to determine if your LLC is eligible for any of these incentives.

Double-checking the information you fill out before submitting any of your LLC’s documents is always good practice. Make sure you meet the annual report deadline, as not doing so thrice could lead to your LLC being forcibly shut down by Louisiana. May you and your LLC continue to flourish for years beyond its formation!