If you’ve decided it’s time to go out on your own and start your own architecture firm, congratulations! Entrepreneurship is a wonderful pursuit and offers many rewards. It’s not, however, an easy task to start a business of any kind, and one of your first challenges is forming your business entity. If you’ve chosen to form a limited liability company (LLC), you’re like many entrepreneurs that understand the benefits that an LLC offers, including personal liability protection.

Starting an LLC involves several steps, which we’ve outlined in this convenient guide.

Check Business Name Availability

Presumably, you’ve chosen a winning name for your architecture firm, but you’ll need to make sure it’s available and that it follows the LLC naming rules of your state. Each state has its own rules, but all require that your name contain either the words “limited liability company” or one of its abbreviations. Many states also restrict the use of certain words, so check your state’s specific requirements.

Next, head to your Secretary of State’s website to do a business name search and see if your chosen name is already taken. You’ll also want to check for name trademarks on the United States Patent and Trademark Office’s website.

Finally, see if the website domain name that you want is available on a site like GoDaddy, and if it is, go ahead and purchase it to lock it in. It doesn’t usually cost much to do so.

Choose a Registered Agent

Next, you’ll need to select your LLC’s registered agent, which is a person or business that will be authorized to accept documents, correspondence, and service of process on behalf of your LLC.  You or another member of your LLC can be the registered agent, but that can pose some restrictions because an LLC’s registered agent must be personally available during regular business hours at the official registered agent address.

Many entrepreneurs instead elect to hire a registered agent service, which will accept your documents and correspondence, notify you, and generally make your documents available on an online dashboard for you to retrieve. Registered agent services usually only cost between $100 and $500 annually.

Elect a Management Structure

One of the great things about an LLC is the management flexibility it offers, but you do have to make one key decision – will your LLC be member-managed or manager-managed?

A member-managed LLC is one in which all LLC members are directly involved in running the business. A
manager-managed LLC, on the other hand, is one in which only certain members are appointed as managers of your architecture firm. Outside managers also may be hired and appointed as managers, but that’s optional.

Some states require that you specify your management structure on the document you’ll file to form your LLC.

File with Your State

To officially create an LLC for your firm, you’ll file a document with your state that’s most often called the articles of organization, although in some states, it’s called a certificate of organization or a certificate of formation.

The filing can typically be done on the Secretary of State’s website in just a few minutes. A fee is involved which varies by state.

For an architecture firm, there is one caveat. In some states, an entity called a professional limited liability company (PLLC) is an option. PLLCs are LLCs but designed for those that involve professions that require state professional licensing, like architecture.

The differences are that some states require that all members or a certain number of members be professionally licensed, and there’s a bit of a difference in personal liability protection. Neither an LLC nor a PLLC protects members from liability in the case of malpractice or an accusation of wrongdoing against a member, but with a PLLC the members who are not accused of malpractice are not impacted by the action.

You’ll need to check with your state to see if they recognize PLLCs and what the requirements are. You might also speak with an attorney to see if a PLLC is a better choice for your firm.

Create an Operating Agreement

An operating agreement, though not required in the majority of states, is critical because it defines the ownership of your LLC, who the managers are, the roles and responsibilities of members, voting rights, and much more. Do not skip this step! In the absence of an operating agreement, state LLC regulations will apply, but such laws do not cover all situations, which means that disputes between members could end up in court. A well-drafted operating agreement can prevent this.

It’s best to have an attorney draw up your operating agreement, but you can find templates online that you can use. If you do, it’s advisable to at least have it reviewed by an attorney.

Get Business Licenses and Permits

Check with your state and local governments to learn about any licensing and permitting requirements for your architecture firm. Professional licensing requirements, at the very least, are almost a certainty.

Obtain an EIN

If your architecture firm has more than one owner or if you are hiring employees, you’ll be required to obtain an Employer Identification Number (EIN), which is for payroll and tax purposes. Just head to the IRS website to apply for free.

Purchase Business Insurance

Next, have a conversation with a business insurance agent to see what insurance they recommend for an architecture firm. You’ll likely need at least general liability, professional liability, and malpractice insurance.  You may also need business property insurance.

Open a Business Bank Account

Finally, you’ll want to head to the bank to open a business bank account. You’ll need your EIN, and possibly your articles of organization, your operating agreement, and a banking resolution that specifies who is authorized to make financial transactions on behalf of the LLC.

In Closing

Starting an LLC is a bit of a process, but the benefits that an LLC offers make it worth your time and effort. Sometimes, entrepreneurs turn to a business formation service that can help with the filing and with many of the other LLC formation steps. Alternatively, if you need help, don’t hesitate to consult with your attorney. Just be sure not to skip any of the steps to give your architecture firm the best chance of success.