Follow our free guide to form an LLC in Louisiana
- Pros and Cons of Forming an LLC in Louisiana
- Starting Your Louisiana LLC
- Maintaining Your Louisiana LLC
- Additional Louisiana Resources
Starting an LLC in Louisiana is a process with multiple steps. Our comprehensive guide is divided into two main phases, detailing every part of the Louisiana LLC formation journey.
Pros and Cons of Forming an LLC in Louisiana
According to Wallethub, Louisiana ranks third for having the lowest property taxes, with an effective real estate tax rate of 0.51%. The median home cost is $145,300, much lower than the national median of $216,200. Average rent for a 2-bedroom apartment equals $1,070, compared to the national average of $1,240.
Low Tax Burden
Compared to the states that have an income tax, Louisiana has the fifth-lowest individual income tax burden, at 1.49%. Tax burden is the proportion of tax paid per income, and as in most states with minimal tax burden, Louisiana’s average income is also low, at $45,146, almost $12,500 lower than the national average.
Opportunities in Visitor and Tourism Spending
Louisiana is one of a handful of states to legalize betting and open-container alcohol consumption. As a result, the state attracts many tourists and travelers. In 2017, the total spending by domestic and international visitors increased by 4% from 2016, reaching $17.5 billion. Tourism also led to 236,000 jobs and $1.8 billion in total state and local tax revenues.
Slow Economic Growth
Louisiana is ranked 48th in the U.S. for economic strength because of its high unemployment rate and low economic output. Despite the growing population, the state maintained the small 0.4% increase in employment growth. Louisiana also has low venture capital opportunities. In 2016, only 6 deals were made, totaling $33 million, compared to other states such as California, New York, and Texas, raising venture capital in the billions.
High Unemployment Rate
Louisiana’s unemployment rate is tied as the 4th highest in the country, at 5%. This is greater than the national average rate of 3.7%. Efforts to improve the unemployment rate include workforce programs and initiatives, but the state has not seen a drastic increase in jobs available yet.
Poor Quality of Life
Louisiana is one of four states with a poverty rate higher than 18% of the total population. Ranking #47 for health care and #50 for health care affordability, the state does not seem to support its high population. In Louisiana’s education, the number of schools and staff available run consistently below national average. Based on these few statistics, there’s no question why Louisiana was ranked 42nd for “quality of life.”
Cost of Doing Business
- $100 filing fee / $30 Annual Report
Phase One: Starting Your Louisiana LLC
Starting an LLC has several steps and phases. Swyft Filings can walk you through forming your business, all the way to the final step.
- Step 1: Name your LLC
- Step 2: Establish Ownership of your LLC
- Step 3: Decide on a Registered Agent
- Step 4: File the Articles of Organization
- Step 5: Create your Operating Agreement
- Step 6: Register for an EIN
Step 1: Name Your Louisiana LLC
The initial step to forming an LLC is to appoint a name for the company. State and federal governments have guidelines regarding business names. Certain names also have restrictions, like the ones you see below.
Tip: Use a free business name search tool to ensure your company’s desired name is available.
Business Name Guidelines
- The official name of your business must end with: Limited Liability Company, Limited Company, LLC, or L.L.C.
- Your business name cannot be intentionally misleading to consumers
- The name of your new LLC must not be similar to another organization’s name/trademark
- “Lottery” and “Bank” are ineligible for use (any state)
- Terms that represent educational or Veterans’ organizations are restricted
- Terms related to the Armed Forces or civil servants (police, EMT, fire)
Depending on the regulations within your state, additional paperwork may be required for a type of name, rather than being restricted.
In the growing use of technology, having a website is important. In deciding a name for your LLC, consider checking a domain name (or URL) on a number of domain hosting websites.
Step 2: Establish Ownership
Instead of referring to the leadership in a company is “owners”, they are officially named “members” or “managers.” Certain companies have a more complex business structure that requires them to have managers; not all businesses are required to have managers, but all LLCs have members.
LLC Management Structures:
- Member-managed: Members of the LLC operate and make business decisions for the company.
- Manager-managed: Members are more hands-off and appoint a manager to run the operations of a company.
Louisiana LLC Member Guidelines
Required Number of Members
At least one member or manager is required to form an LLC in Louisiana.
Member Disclosure Requirements
Members are not required to disclose their information; however, all provisions must be listed in the Articles of Organization, and the signature of the organizer (the person preparing the documents) is required.
LLC members in Louisiana may be of any age.
There are no residency restrictions imposed on LLC members in Louisiana.
Step 3: Find a Registered Agent in Louisiana
All state governments require the registered agent to be listed in the LLC filing documents. The LLC filing in Louisiana is not deemed completed until this position is filled.
What is a Registered Agent?
A Registered Agent is a person or third-party that is authorized to accept official government document and service of process notices on behalf of the LLC.
Can I be my own Registered Agent for my business?
As long as you have a physical address in Louisiana, you are legally allowed to be your own Registered Agent.
Why is being my own Registered Agent sometimes discouraged?
Since the Registered Agent’s name and address are publicly listed, LLC business owners who choose to be their own Registered Agent risk compromising their personal information.
Why do you need a Registered Agent?
In the event of an urgent notice, the Registered Agent serves as a reliable contact person for the government on behalf of the LLC.
What are the main requirements for a Registered Agent?
- The Registered Agent must have a physical address — not a P.O. Box
- The Registered Agent must be available during business hours
Who can be a Registered Agent in Louisiana?
- A state resident with a physical address in Louisiana
- An LLC or corporation that is licensed to conduct business in Louisiana
Tip: Avoid the hassles and choose Swyft Filings to fill the Registered Agent needs for small businesses in Louisiana. Find more information here.
Step 4: File the Articles of Organization
The document that legally files your business with the Secretary of State is called the Articles of Organization.
What is the Articles of Organization?
The Articles of Organization is a document that outlines all statements that are needed to form an LLC. If the submitted Articles of Organization meets all requirements, then the business is formed with the state.
Why do I need the Articles of Organization?
Your LLC business in Louisiana will not be legally considered by the Secretary of State without filing this document. The Articles of Organization is basically the LLC’s foundation.
What information is included in the Articles of Organization?
- The name and address of the LLC
- The type of registered agent (personal or commercial)
- The name of the members or organizer filing the paperwork
- The name and location of the registered agent
- The chosen LLC management structure
- The duration of the LLC (perpetual or not)
Step 5: Create an LLC Operating Agreement
Although it is not required by the state, an LLC operating agreement is ideal for organizing the roles and responsibility of an organization. Here’s why:
What is an LLC Operating Agreement?
Think of the LLC operating agreement as a map — this legal document lays out the rights and responsibility of each role involved in the business. Depending on how specific the operating agreement is, this document may also include details on how the business will operate.
Why do I need an LLC Operating Agreement?
The LLC operating agreement, although not “required,” reduces the risk of any future conflict that may arise. In the event of a lawsuit or obtaining property, the LLC operating agreement is useful.
Do I need to file the LLC Operating Agreement?
The LLC operating agreement is not filed with the state; the document remains in-house and is used for the benefit of the LLC.
What goes into an LLC Operating Agreement?
While there is not a set rule of what must be included in your LLC Operating Agreement, most documents include the following information:
- List of the members/managers and their roles
- Designation of authority in the LLC
- Initial capital contributions of the members
- Voting designations and percentages of the members
- Member transfer/addition rules and restrictions
- Distribution of profits
- Meeting schedule
Tip: Get a customized LLC Operating Agreement for your small business with Swyft Filings. Add structure to your LLC now.
Step 6: Register for an EIN
The EIN (Employer Identification Number) is also known as a Federal Tax ID and is a nine-digit number that is assigned to your business by the Internal Revenue Service (IRS). The EIN identifies your business with the government much like a personal Social Security number.
Are all businesses required to have an EIN?
Federal law dictates that certain types of business entities register for an EIN:
- Any business with employees (even if owned by one person)
- Any business with more than one member
- A partnership (LLC or C-corp)
Please Note: A sole proprietorship is not required to have an EIN, but it is still recommended.
Why does my LLC business need an EIN?
The more common reasons you would need an EIN are:
- To hire employees
- To open a business checking account in the U.S.
- To file your company’s taxes
- To pay independent contractors
In short, if you make money through your business and it has employees, you must have an EIN.
Is the EIN publicly listed?
The EIN for your LLC will be part of public record.
Can I use my Social Security Number as the EIN?
If you are a sole proprietorship who wants an EIN for your business, you can elect to use your social security number; however, your EIN is part of public record.
Swyft Filings offers EIN services for small businesses in Louisiana. Find more information here.
Phase Two: Maintaining Your Louisiana LLC
Now that the first phase of starting your LLC is complete, you now have to focus on how to keep your business up-to-date with the state and federal governments. We organized these tasks into four steps:
- Step 1: Register for the necessary taxes in Louisiana
- Step 2: Apply for the required permits and licenses
- Step 3: File the Annual Report for your LLC
- Step 4: Request a Certificate of Good Standing
Step 1: Register for Louisiana State Taxes
Limited liability companies in Louisiana are taxed the same way as federal income tax. For example, if an LLC elects to be taxed as a corporation for federal income tax, that LLC will also be taxed as a corporation for the state’s income taxes. Beginning in the 2017 Franchise tax period, LLC for Louisiana franchise taxes are treated the same way as federal franchise taxes.
Louisiana’s top corporate tax rate is 8 percent, placing Louisiana 42nd in the nation for business tax climate.
Other taxes your LLC may need to pay:
- Sales and Use Tax at 4.45% (as of July 1, 2018)
- Employee Withholding Tax
- Unemployment Tax
Step 2: Obtain Business Licenses and Permits
The licenses and permits required for an LLC in Louisiana can vary, depending on a number of variables:
- Location (city and county)
- Type of Business
Tip: If you would like to see more in-depth information on licenses and permits, please feel free to visit the content in our learning library that covers business licenses and permits.
Step 3: File an Annual Report
All businesses formed in Louisiana are required to file an annual report with the Secretary of State.
What is an annual report?
An annual report, which is also called a periodic report, is a legal form that is filed with the Secretary of State on a periodic basis that is designed to keep your business’s information current with the state. The information may also be useful for investors because it documents the activities and finances in the previous year.
What kind of information is in the annual report?
The information requested in the annual report is similar to what was listed in the annual report:
- The name and address of the business
- The name and address of the registered agent
- The names of the members
- The business’s EIN
- Finances and business activities
Is the annual report part of public record?
The annual report filed on behalf of your LLC is a matter of public record.
Fees and Due Date
Due Date: Annually on the business’s anniversary date (the date approved by the state)
Implications of Late Filings: Zero late filing fees*
*Failure to send an annual report after three years may result in the dissolution of your Louisiana LLC, or deemed “not in good standing.”
Swyft Filings helps you stay compliant by providing stress-free solutions. File your annual report with us today.
Step 4: Request a Certificate of Good Standing
The final step for your LLC’s paperwork is to request a Certificate of Good Standing.
What is a Certificate of Good Standing?
The Certificate of Good Standing confirms with the state that your business has been legally formed and operating properly.
Who issues the Certificate of Good Standing?
The Certificate of Good Standing is issued by the Secretary of State.
When can I request a Certificate of Good Standing for my business?
You will be able to request a Certificate of Good Standing after your LLC is officially formed through the Secretary of State.
Why do I need a Certificate of Good Standing?
Instances where you might need a Certificate of Good Standing include:
- Presenting your business to a bank or lender for financial assistance
- Forming as a foreign LLC in another state
- Receiving or updating business licenses or permits
Does the Certificate of Good Standing have an expiration date?
The Certificate of Good Standing does not expire/does not need to be renewed. However, entities may require the certificate to be requested during a specific time period. For example, your bank may want a Certificate of Good Standing that is less than 6 months old.
Swyft Filings can create a Certificate of Good Standing for your Louisiana LLC. Click here for more information.