So You’re Setting Up an LLC
Those running or owning a business are familiar with the different types of businesses. There is a sole proprietorship, partnership, and corporations. Very few people are familiar with LLCs. The LLC is also known as Limited Liability Company. The LLC contains features of both the corporation and a partnership.
It is much easier to set up an LLC than a corporation. The LLC will offer limited liability to the owners in the same way a corporation does. One of the most important advantages of the LLC is the owners' liability is protected as the LLC is treated as a separate entity. The other advantage is the ability to decide how it is to be taxed. The owners can opt to have the LLC taxed as a C Corp, S Corp, or any other way they want.
Setting up your LLC will entail a few steps. Just know the more you research about LLCs the more prepared you will be. It is a good idea to always research something before committing to anything. This will help ensure the action you are taking is the best choice out there. Here is the actual procedure for forming an LLC: 1. Chose a name for your business and then add "LLC" or "Limited Liability Company" at the end of it. Check to see if the name has already been chosen. If so, you will have to decide on another name. 2. Construct and submit the Articles of Organization to the secretary's Office. 3. Draft the Operating Agreement. It is not mandatory, but this will help define how the business will operate, the management structure of the business, the profit sharing, and so forth.
The many advantages a Limited Liability Company offers is flexibility, ease of start up, and a business growing in popularity. Avoid the hassle of the mountain of paperwork, time consumed in meetings, and the legal fees involved in starting up a corporation. You want the limited liability and the LLC is the right match. When starting up an LLC, you'll find the business is very flexible in how the profits will be distributed to the members and employees. This is quite different from a partnership where the profits distribution is usually 50/50. The Limited Liability Company on the other hand can decide to distribute the profits to its members any way the LLC wants to.
No ownership restrictions are an enticing advantage of the Limited Liability Company. You choose the number of members you want to have. An S. Corp can't have more than 100 stockholders. The owner type can vary in an LLC. It could be an individual, corporation, non-U.S. resident, and even other LLCs. A Limited Liability Company promotes great credibility. Your business will reap the benefits of legitimacy and credibility when dealing with future companies and partners.
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