The best way to legally establish each owners fraction of ownership, share of proceeds, rights and responsibilities is to create an LLC. An LLC or operating agreement will configure you financial and business relationships with each proprietor and establish how your business will be run.

Although it is not completely necessary in all 50 states to obtain an LLC for your business, it is recommended. The LLC will protect all owners’ personal assets and ensures that in the case of a filing, your company’s rules are followed.

If you are interested in obtaining an LLC you need to think of a name that is unique to your company and use search engines to confirm that no other persons in your state are using this name. Also, all limited liability companies must end in LLC or L.L.C.

Next, you will go to the Secretary of State’s website for your state. There you can either complete the forms online or you may print them, complete them and deliver them personally to the SOS office. There is a fee to complete these documents. The fee can be as large as $900 in some states.

Your documents will be mailed directly to you. Though the mailing time varies, it is usually approximately two weeks until arrival.

You are not however completely covered by having an LLC. There are a few things that you should watch out for. If you personally injure someone you would not be covered under the LLC. Also, if you personally guaranteed a business loan or bank loan and the LLC defaults on it, you would be personally responsible. If the company were to fail to deposit employee withholding taxes with the IRS, this would be another instance of how you may be personally responsible.