| Given that some states do not allow
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| | long as it is provided for in the
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| single-member LLCs, this form cannot be
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| | operating agreement.
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| considered as an outright substitute for
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| | Starting Your Own LLC The basic legal
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| a sole proprietorship. Nonetheless, the
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| | documents and procedures involved with
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| LLC is designed to give you the best of
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| | starting your own LLC is a simple
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| both worlds: the limited liability of a
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| | process. You can prepare the paperwork
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| corporation while retaining a level of
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| | yourself, or you can hire a lawyer to
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| tax simplicity that resembles a
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| | prepare, sign and file the basic
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| partnership.
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| | documents to set up an LLC.
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| Features of the LLC Limited Liability
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| | The requirements in forming an LLC are as
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| Status. The main attraction of an LLC is
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| | follows: LLC Articles of Organization.
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| its limited liability status, a feature
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| | The first formal step to create an LLC is
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| that it shares with corporations. The LLC
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| | the submission of the LLC Articles of
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| limit your personal liability from
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| | Organization with your state's LLC filing
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| business debts and damages incurred by
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| | office. Request a copy from your state's
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| the business. It basically lets you off
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| | filing office, typically the Department
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| the hook from legal liabilities such as
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| | or Secretary of State's office, normally
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| court judgments and legal settlements
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| | located in your state's capital city
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| obtained against the business.
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| | (some big states have branch offices).
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| Tax Benefits. Like sole proprietorships,
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| | The LLC Articles of Organization is a
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| partnerships, and S corporations, the
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| | relatively simple form where you need to
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| business profits and losses of an LLC are
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| | supply some basic details about your LLC:
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| taxed at individuals' income tax rates.
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| | name, principal office address, agent and
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| You will avoid a corporation's double
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| | office for receiving legal papers, and
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| taxation, where taxes are reported at a
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| | names of its initial members or the
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| separate business level.
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| | special management team. Upon submission,
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| Owners of the LLC. While owners of
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| | the name of your LLC will be checked for
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| corporations are called stockholders, LLC
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| | possible duplication. Check with the LLC
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| owners are referred to as members. A
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| | filing office if the additional step of
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| member, who invests in the LLC and
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| | posting a notice of intention to form an
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| receive a percentage ownership interest
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| | LLC in a local newspaper prior to filing
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| in return, may be an individual or a
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| | your Articles is required (some states
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| separate legal entity such as a
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| | require this, while many don't).
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| partnership or corporation. The
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| | LLC Operating Agreement. The operating
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| percentage ownership is used to divide up
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| | agreement defines the basic rights and
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| the assets of the LLC when it is sold or
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| | responsibilities of LLC members. As a
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| liquidated, to split up profits and
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| | matter of prudent business practice, this
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| losses of the LLC or to divide up its
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| | is a crucial documentation that serves as
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| voting rights. While an LLC can exist
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| | the written guidance for the newly formed
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| with one member, some states such as the
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| | LLC. This document usually provides for
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| District of Columbia and Massachusetts
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| | the purpose of the LLC, its duration,
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| require LLCs to have two or more members.
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| | transferability, and management
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| Flexible Management Structure. An LLC can
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| | structure. This written agreement also
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| be run either by its members or a
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| | contains provisions on how a new member
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| management group elected by the members.
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| | can be accepted, how an existing member
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| While many small businesses are managed
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| | can withdraw, the continuation of the LLC
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| by their own members, an LLC can easily
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| | should any member dies or retire, and
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| adopt a management-run structure in the
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| | buy-out rights of existing members. More
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| following situations: the members decide
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| | importantly, the operating agreement
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| to employ outside management help; not
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| | defines the percentage of membership
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| all of the members want to run the LLC;
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| | interest, and the sharing of profits and
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| or an outside investor wants to be given
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| | losses among members.
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| a vote in management.
| |
| | Given the newness of the LLC business
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| Flexible Distribution of Profits and
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| | structure, a number of issues
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| Losses. Similar to partnerships, dividing
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| | particularly in tax requirements are
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| up profits among the LLC members is not
| |
| | still fuzzy. It is best to consult your
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| restricted to the members' capital
| |
| | accountant or tax advisor in the
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| contributions. You may split up LLC
| |
| | preparation of tax documents for an LLC.
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| profits and losses any way you wish, as
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| |
|
