Forming a limited liability company is easier than you might think.
It can be accomplished with minimal fees and offers many advantages over partnerships or corporate business structures.
Here are the basics to help you get started.
Choosing a Business Name
Before filing an LLC, you must choose a business name that is available in your state and does not infringe on another company?s trademark rights. Contact your state LLC office to find out if your proposed name is available. In some states, you may be able to reserve your limited liability company name until you file articles of organization.
Article of Organization
A limited liability company is formed by simply filing an article of organization and paying a filing fee with the Secretary of State in whatever state you wish to form your company. This can be as easy as filling in the blanks with your LLC name, members and contact information. Most states require modest filing fees (around $100).
A lawyer is not required to file an article of organization because state requirements are usually self-explanatory.
Some states charge annual fees and taxes, but most do not require annual administrative procedures. However, it is important to document major business changes and hold regular meetings to protect your LLC status.
Operating Agreement
For those who forgo legal advice in setting up a limited liability company, it is important to make sure your interests are protected.
Although it is not required, it is advisable to have an operating agreement in addition to an article of organization. An operating agreement defines ownership percentages, roles, rights and responsibilities of members. This document can protect the LLC structure if it is challenged in court, and it can help you avoid state default LLC rules.
Advantages of the LLC Structure
A limited liability company is a business ownership structure that combines the features of a partnership and a corporation, and it offers many advantages over these structures. The owners, called members, are protected from liability for the acts and debts of the LLC.
Limited liability companies are subject to pass-through taxation so members are not taxed twice. Unlike partnerships, LLC members can elect their own form of profit distribution. The limited liability company is also easier to operate than a corporation because it does not require members to take corporate minutes at meetings or pass resolutions to make changes in the business.
Unlike a corporation, however, limited liability companies have a limited life. The LLC is dissolved when a member dies or goes bankrupt.
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Source: http://www.legallanguage.com/legal-articles/limited-liability-company/
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