An LLC, or limited liability company, is a great option for just about any business. As the name suggests, it offers limited liability to the owners of the company – you and your partner(s) if you have any. This means that you have limited liability for the debts as well as for the actions of your company. Quite a few entrepreneurs choose to set up LLCs for their business for tax reasons. It helps to avoid double taxation, as the LLC is not taxed. Only the owners or LLC members are taxed. LLC owners have quite a few options with taxes so that they and their accountants can find the solution that is going to work the most in their favor.
Setting Up the LLC is Easy
It is not too difficult to set up an LLC, however, you will find that having the help of a lawyer is going to make every step of the process much easier on you. Different states have different requirements and rules when it comes to forming an LLC, and the first step is going to be finding the forms you need and the rules for forming the LLC in your state.
You can find the rules and fees involved for your state here at FindLaw’s online guide to state corporation’s offices.
You will need to have a business name, which now will need to end with the words limited liability Corporation or LLC. You have to make sure that the name you want is available as, well.
You will have to complete the forms and turn them in, and in some states you also have to submit a notice to your local newspaper. This notice simply shows your intent to set up an LLC. You also need to have an EIN or employer ID number from the IRS, as well as a separate bank account for the LLC.
You may also want to sign an operating agreement amongst the members of the LLC, as this can help to resolve disputes down the line. It is not something that the state requires, but it is a good idea.
While it is within the realm of possibility to set up the LLC on your own – and many people do – it might not be a good idea. Contacting an attorney versed in the subject is going to be a much better option. He or she will be able to walk you and the others in the LLC through the process, ensure the forms are correct, and make sure that you have a smooth transition from your current model to an LLC.
Are you considering an LLC? What do you see as the other benefits to this form of a company as compared to other options?