What is an LLC and why do I need one?
An LLC (limited liability company) is one of the most popular entity types chosen by new business owners and start-ups. It's of the easiest entity types to maintain with few annual requirements or ongoing filings, but it still provides the invaluable benefit of liability protection.
What is Liability Protection?
Filing a limited liability company separates your personal assets from those of the business, preventing you from being personally or financially responsible for debts or legal matters relative to your business. Members are still liable, but only to the extent of their investments in the business. If, for instance, your company is involved in a lawsuit, the assets of the LLC itself could be in jeopardy while the assets of the members would not.
What kinds of businesses typically choose to file as an LLC?
Limited liability companies are easy to maintain while remaining extremely flexible, so it's not surprising that it is a popular choice among owners of businesses of all different shapes and sizes. Many LLCs only have a single member (owner), while the LLC structure itself allows for an unlimited amount of owners, giving power to you, the owner of the business to determine its structure.
For businesses in industries, like construction, where unforeseen circumstances and hazardous conditions may hold the owner responsible, consider incorporating as an LLC. This entity may not be the best choice for businesses that plan on raising capital through outside investors. LLCs are not public structures and do not have shareholders, so taking a company public is not an option. However, in the event that you'd like to take your business public you may switch to a public legal structure, like a C corporation, later on.
What are the maintenance requirements of an LLC?
LLCs have fewer ongoing requirements compared to their corporation counterparts. For example, an LLC is not required to keep minutes or hold annual meetings, have a board of directors, or is held to the same record keeping standards of a corporation. The state the LLC is formed in will have its own set of annual requirements, including required business licenses and permits, which vary from state to state. Be sure to check in with your Secretary of State to ensure you don't accidentally missing applying for anything.
Are there tax advantages for LLCs?
Depending on how your business is structured, the amount of revenue your business earns, and several other factors, forming an LLC can provide potential tax benefits for business owners. LLCs are allowed to choose how they want to be taxed, either as an S corporation or C corporation. LLCs don't pay their own taxes directly, the income of the business its passed on to the members of the LLC through "pass through taxation." This means that a member is subject to self-employment taxes, but at higher levels of income, the LLC can often pay a lower base tax rate than a C Corporation. The best way to determine your potential tax benefits is to consult an accountant. Every Package Includes
Once we complete your filing, you'll receive your Articles of Organization and Operating Agreement. These are the documents that support your organization and they arrive in your Corporate/LLC Kit — or Elite Corporate/LLC Kit if you choose to upgrade.
Articles of Organization: The Articles of Organization are the main filing documents that begin your existence under state law. Once filed, you have a legitimate business!
Your Articles of Organization spell out the name, basic purpose, incorporators, amount and types of stock which may be issued and any special characteristics of the business entity. They are included in your LLC kit when we form your business.
The Articles of Organization are approved by the Secretary of State and should be kept in your kit as a record of filing with the Secretary of State.
Operating Agreement: The Operating Agreement of your LLC contains the written rules for conduct of the LLC. They are distinct from the Articles of Organization, which only state the basic outline of the company.
Operating Agreements generally contain information on meetings, elections of a board of directors and officers, notices, types and duties of officers, and other routine conduct. They are, in effect, a contract among members and must be formally adopted and/or amended.
The Operating Agreement is included in your kit when we form your LLC, and should be completed and signed upon receipt.
Laws and fees governing LLCs can vary from state to state.
Most of our customers choose to form an LLC in the state in which they are conducting business. This is typically the most simple and cost effective way to operate.
Some customers form their LLC in other states for tax reasons. Any state that you do business in will require you to file a "Foreign Qualification" if you are not forming an LLC in that state. This regulation is state-specific.
Get more details in "Foreign Qualifications".
The purpose of a Registered Agent is to provide a physical address for your business so that it can accept official documents on behalf of your corporation (tax notices, annual reports, legal-process documents such as a summons, etc.).
The primary benefit of this service is that it provides a layer of privacy between you and the public. As the Registered Agent's name and address is one of public record, generally the Registered Agent's legal address will be the one listed in all official public documents.
Penalties for not maintaining a Registered Agent generally may cause a jurisdiction to revoke a business's corporate or LLC legal status. Please note that post office boxes are not allowed.
Learn more in "Registered Agent Services"
To keep your business legally viable after you incorporate, there are a number of steps you may need to follow. You may need to file an Article of Amendment to indicate changes in your company. You also may need to file an Initial or Annual Report, which is a requirement in most states. Our business filing experts can help you process necessary changes to your business.
What our Customers are Saying
"This is my first experience with setting up an LLC (or any type of company), so I did not know what to expect. Your website walked me through the process and it was very easy"
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