Anyone who wants to start a business should consider starting an LLC business, LLC or Limited Liability Company offers the ability for people to run a business, and in the event of some legal problems this type of company limits your responsibility as much as possible.
LLC’s can be used for any type of business imaginable. However, in some places, professionals need to start a special kind of LLC. It can represent any type of business, whether small or large and also it does not matter if it is a one-man business or a team of people. It is also one of the most common entities that own commercial and rental property.
What is an LLC?
“Limited liability company” is the abbreviation for “limited liability company.” A limited liability company (LLC) is a type of legal entity that can be used to own and operate a business. LLCs are in demand because they have similar limited liability protection as a corporation while being easier and less expensive to establish and administer. The limited liability part means that the LLC owners, which are called the members, aren’t personally responsible or personally liable for the debts or the liabilities of the LLC. Hence, the liability is limited to the members themselves. For instance, if the LLC is sued, the members don’t risk losing their personal property in that lawsuit.
The LLC is formed and recognized at the state level, meaning you have to deal with the state while forming and maintaining your new business.
How Is LLC Formed?
LLCs are formed by filing a document, typically called articles of organization or a certificate of formation, depending on the state. You should file the articles of organization with the secretary of state in the state where you want to establish an LLC. So the general rule is that LLCs officially exist as soon as the articles of organization are filed.
Management of an LLC
Management can vary, for LLCs can be run and managed by the members themselves, or by the managers elected by the members. They are authorized to act on behalf of the LLC and most of the management decisions and day-to-day operations are handled by the manager. If you hire a registered agent, he can keep track of all your paperwork for you. A registered agent is a person or firm designated by an LLC or a corporation to receive legal documents on the company’s behalf.
LLCs can also be structured as corporations, having a managing board that votes on major decisions to how a board of directors would do in a corporation. As it can be seen from the stated, the management can be structured the way you want it to be.
The Members of LLC
LLCs are generally owned by the members. They can be owned by one person, which is typically referred to as a single-member LLC, or there can be multiple people involved, better known as multi-member LLC. Members can also be other LLCs apart from individual people. When it comes to the US, the members don’t need to be US citizens or permanent residents, but also don’t have to be physically located in the state where the LLC is established.
Steps When Starting an LLC
- Decide which state to form the LLC in. The best solution is to form the LLC in the state where you live or where you plan to conduct a business.
- Decide on the name. It must comply with the state’s rules, for most states require that the LLC name includes the indication of being the LLC. Just include LLC or LTD or limited in the name. Also, try to avoid naming it the same as some other LLC registered in the state. Search the Secretary of State’s records to check whether the name is available. You can also search USPTO (the United States Patent and Trademark Office) to see if the name is available nationwide.
- Determine how the LLC will be managed. Choose between a member-managed or a manager-managed LLC. If you are not sure about the best solution, it is better to consult an attorney to help you with the issue.
- Choose the registered agent for the LLC. They only have to be over 18 with a physical address in the state and agree to act as the registered agent.
- File the Article of Organization.
- Prepare the operating agreement– the internal document describing how the LLC will be run.
- Get a tax ID number from the IRS.
The Business for Future
Although many are skeptical about running an LLC business, it should be considered that LLCs have many qualities and they are more flexible than the other forms of legal entities. LLCs offer to their owners peace of mind because they know that they are legally secured, that possible lawsuits would not be aimed at them but rather on the business itself.