How to Start an LLC in Louisiana

Louisiana is known for Mardi Gras, great food, and bayous but there is so much more to its business climate than those things. It is the state of several large corporations like CenturyLink, Acadia Healthcare, and Ochsner Health System that employ approximately 104,000 people. However, the state has more small businesses than large ones. There are 347,436 small businesses in the state and nearly 94,000 of them have employees. According to federal numbers from 2018, 53.6% of the state’s employment is provided by small businesses. Top industries in Louisiana include chemical, petroleum, and coal industries, and manufacturers. About 30% of the state’s industry is in chemicals and manufacturing, which makes up about one-sixth of the state’s gross domestic product.

Your LLC will get started when you pick some of the basic elements for your business. This includes choosing a name, picking a registered agent, and filing Articles of Organization. These are the first things you will do when you start creating your LLC.

Picking a name for your LLC is important. You can’t just submit any name you want for a business in Louisiana. The state has some general rules for selecting business names. 

The name must be unique

The most important rule is the name you pick for your LLC must be unique. That means it can’t be used by any other business in Louisiana. Additionally, the name you pick can’t be confused with another business name.

Watch the spelling

A business name can’t be similar to another name either, which includes using a similar spelling. In Louisiana, the state also checks both traditional and Cajun spellings as well as pronunciation to determine similarities.

Be truthful

The state also had conditions about certain words used in the name. An LLC owner can’t include words that imply it is a nonprofit or charitable cause. It can’t include the word insurance until it’s an insurance agency or brokerage firm. 

Avoid certain words

It can’t include words like bank, savings, safe deposit, trust, building and loan, credit union, or similar words without getting written approval from the Commissioner of the Office of Financial Institutions. An approval letter must be dated less than 14 days before being issued a certificate of organization.

Search for name availability

Starting a search for a business name should begin on the Louisiana Secretary of State’s website. It has a name search tool that is free to use. All you need to do is type in words you want to use or a proposed name and hit search. The tool will generate all the businesses in Louisiana with that name or something similar. 

The business search tool can be used multiple times until you get an idea for a unique business name. 

Research digital names

Look to see if a matching domain name is available. To provide a consistent experience, the LLC name and your domain name should match. 

As you’re conducting name research, consider checking on social media handles too. Many small businesses and sole proprietors are foregoing traditional web pages and using social media pages for their business. You can see if anyone on any of the platforms is using the name you want. 

Picking a registered agent is another important decision for someone starting an LLC. A registered agent is someone who can collect, sign for, and accept legal documents (like service of process) and other types of mail for the business. Since this is a legal function, it bears some responsibility.

The State of Louisiana mandates that all businesses have a registered agent with a physical address within the state. However, there are a few other rules regarding who can be an agent. 

It can be the business owner, a family member, a friend, an attorney, an employee, or someone else. 

Louisiana has only three requirements for registered agents:

There are registered agent services too. For an annual fee, a professional company will fill this role for your business. Some entrepreneurs prefer this service over servicing as the company’s agent themselves to ease their workload and ensure the documents are received and handled properly. 

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Those wanting to create an LLC must file Articles of Organization with the Louisiana Secretary of State’s office to become a business. Articles of Organization list the basic facts of the business such as:

The Articles of Organization form can be downloaded and printed from the state online site and sent back electronically, by fax, or by mail. Louisiana forms can be difficult to find, but the state created a website so would-be business owners can file forms and keep track of all their tasks in starting a business.

When the Articles of Organization are approved, you’re officially doing business as a recognized company in the state. 

Filing fee 

The State of Louisiana has a fee structure for those seeking to form an LLC. The fee to file a Louisiana Limited Liability Company is $100. The filing fee for what the state calls a low-profit limited liability company is also $100. You can change out your registered agent on documents for $25. 

A low-profit LLC (L3C) is defined by Louisiana as a hybrid business structure that combines the ability to earn profits as a traditional LLC provides and the social interest of a non-profit. It could be a company whose primary purpose is a social one while it conducts business and earns profits.

Louisiana processing time 

Those who file for Articles of Organization online see their application processed by the state in one to two business days. The state has three to seven business days of processing time for those using paper filing. 

You can also expedite your filing for an additional fee of $50 for clerks to process your filing while you wait in a walk-in service or $30 to pick up your business filing certificate within 24 hours.

Louisiana doesn’t mandate that LLCs or other businesses craft an operating agreement to file with the state. However, an operating agreement can protect your limited liability status if your company is ever sued. 

It may be required by banks when the company attempts to open a checking account. Even more importantly, an operating agreement protects your startup from state regulations as it takes priority over any state business laws. 

The way state business laws work, any issue not addressed in the operating agreement falls under provisions of state law. That makes it highly beneficial for an LLC to have a highly structured and detailed operating agreement.

An operating agreement is a document that outlines how the business is going to operate both daily and under certain unexpected conditions, like the death of one of its members. 

An operating agreement should include detailed explanations of issues including: 

Getting your LLC up and running is important. Yet, you can’t skimp on the important details like getting tax structures finalized, understanding when to pay taxes and other fees, buying insurance plans, and filing proper documents. These are key components that are the foundation of a business. 

Look to the list below to set up your LLC correctly.

The Employer Identification Number (EIN) is something the Internal Revenue Service, IRS, requires of most businesses. It’s a business Social Security Number so it can be identified for tax purposes. 

However, the EIN is also used on hiring documents, business bank accounts, and loan documents, among other things. It is like a fingerprint for your business so it’s incredibly important. 

Business owners claim their EIN by contacting the IRS and applying for one. With online filing, you can have an EIN in your hand within minutes.

There are a few exceptions to businesses getting an EIN. Sole proprietorships, for instance, aren’t required to get one. Other exceptions are organizations that are strictly charitable, religious, scientific, that do public safety testing, are educational, or meet other specific purposes under the IRS code.

Opening business bank accounts is something else an entrepreneur in Louisiana should do. There isn’t a state law that requires businesses to have separate bank accounts, but it’s a wise move to keep money separated in accounts that are strictly business accounts.

A business checking account also helps manage records for both revenue and expenses. It’s a written record for your accountant and can be used as evidence in an audit or for accounting. 

A small business with few employees can do well with just checking and savings accounts. However, a growing business should also set up a separate payroll account so money going to employees and employee taxes is held separately from operational expenses. 

A growing business also needs a credit card. A credit card with a healthy limit can pay for equipment, inventory, office supplies, or anything that helps run the business without spending what’s in the bank. It can help balance cash flow and pay for emergency things like equipment repair.

Louisiana is different from many states in how it lists its corporate income. It has graduated corporate income taxes where businesses that make more revenue pay more of a tax percentage than those that don’t.

Louisiana’s corporate tax rate starts at 3.50% and rises to 7.50%. The state also implemented a 4.45% state sales tax. Local entities can tax residents until it reaches the maximum of 7%. The average combined state and local sales tax rate hovers over 9.55%.

The state has some tax and incentive programs. One is the Louisiana Industrial Ad Valorem Tax Exemption Program (ITEP). The program targets manufacturers who agree to provide jobs and payroll to the state.

Louisiana business owners must file the annual report every year by their registration anniversary. Businesses must file the documents on their business anniversary date. The annual filing fee is $30 plus a $5 convenience fee to pay by credit card.

Insurance may not be something everyone thinks about but is a necessary item when it comes to business. 

Every LLC does have personal liability protection. While that does safeguard personal assets, insurance can provide additional coverage.

Insurances to consider include: 

Louisiana requires businesses who employ others to carry workman’s comp coverage but there are some exemptions to the rule. It doesn’t require liability or property insurance but also requires commercial vehicles to carry insurance.

In Louisiana, there are stipulations on how much insurance a business can have. For instance, It requires $15,000 per bodily injury liability per person for commercial vehicles. Commercial vehicle insurance must also have $30,000 per bodily injury liability for each accident and $25,000 in property damage liability. 

It is a good idea to invest in insurance. It will help businesses meet state obligations and talking about insurance with a neighbor may net you some extra business.

Additional resources to help you set up a business in Louisiana

Starting an LLC isn’t easy but some Louisiana resources will help you get your dream business moving along. Here is a list of some of the organizations that can help.