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What Is an LLC?
http://video.about.com/sbinformation/What-Is-an-LLC-.htm#vdTrn
A limited liability company (or LLC):
>is a type of business ownership combining several features of corporation and partnership structures&bull
>it is not a corporation or a partnership the owners are called members not partners or shareholders
>the number of members are unlimited and may be individuals, corporations, or other LLCs
Advantages of Limited Liability Company
Limited Liability: Owners of a LLC have the liability protection of a corporation. A LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.
Flexible Profit Distribution
Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax
Disadvantages of Limited Liability Company
Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
Setting Up a Limited Liability Company
There are two main actions:
1. Articles of Organization: If you plan to set up a limited liability company, you will have to file articles of organization with the Secretary of State and pay the required fees. Articles may be prepared by a lawyer or filed yourself.
2. Operating Agreement: Although it is not required in many states to draft an operating agreement, it is advisable. Much like corporate by-laws or partnership agreements, the operating agreement can help define your company profit sharing,ownership, responsibilities, and ownership changes. Each state has different rules governing the formation of a limited liability company. It is advisable to seek tax and legal counsel to determine the best choice for your individual circumstance.
>is a type of business ownership combining several features of corporation and partnership structures&bull
>it is not a corporation or a partnership the owners are called members not partners or shareholders
>the number of members are unlimited and may be individuals, corporations, or other LLCs
Advantages of Limited Liability Company
Limited Liability: Owners of a LLC have the liability protection of a corporation. A LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.
Flexible Profit Distribution
Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax
Disadvantages of Limited Liability Company
Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
Setting Up a Limited Liability Company
There are two main actions:
1. Articles of Organization: If you plan to set up a limited liability company, you will have to file articles of organization with the Secretary of State and pay the required fees. Articles may be prepared by a lawyer or filed yourself.
2. Operating Agreement: Although it is not required in many states to draft an operating agreement, it is advisable. Much like corporate by-laws or partnership agreements, the operating agreement can help define your company profit sharing,ownership, responsibilities, and ownership changes. Each state has different rules governing the formation of a limited liability company. It is advisable to seek tax and legal counsel to determine the best choice for your individual circumstance.
Monday, 22 July 2013
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