You may have seen it in many different places. Perhaps it has become so common you may not even notice it anymore. Normally denoted by L.L.C. or LLC, it refers to a limited liability company. Business owners have to decide what structure to use in their company formation. A LLC business has been considered a mix of a corporation and a partnership. There are similarities between a corporation, partnership and this type of company, meaning that an individual's personal liability is non-existent, much like a corporation, yet it also allows losses and profits to be handled much like a partnership, where the LLC will not be taxed but the taxes will be passed on to the owners.

LLCs are on the rise, as more and more company owners are discovering the savings, flexibility and liability protection it offers. With a smaller company it allows for the avoidance of personal liability, but at the same time, if the venture is not ready to be incorporate, then it is an ideal structure.

You may want to explore some of the advantages and disadvantages of forming a LLC. Most state regulations concerning the formation of this type of business do not reflect the more recent taxation changes and it can be quite a bit more expensive to form this type of company, versus a partnership or sole proprietorship. However, individuals have a limited amount of personal liability, the profits and losses have a different allocation and the IRS will now allow you to choose between being taxed as a corporation or as a partnership.

In recent years, all 50 states have adopted limited liability company laws, offering a very attractive alternative that most small enterprises, including the smallest home-based ventures, should consider. Even with all of the paperwork and at times, expenses involved, it is considered an ideal structure.

There are different ways that a LLC company may run its business. They can appoint one of their members to act and fulfill the duties of president or vice president, or any other position they see fit. Normally, a LLC is owned by its members, meaning that they can appoint managers to directly manage the company for them or they may apportion the duties among themselves. States will normally allow a limited liability company to structure their enterprise in whatever manner they choose.

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Form a Limited Liability Company

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If you have been thinking about different business structures and how they all compare, then you are not alone. Anyone in the business industry, whether they are financiers or merchants, has spent years trying to figure out ways to minimize or eliminate their losses and liabilities. Many now believe that to form a limited liability company is perhaps the best vehicle to help them achieve their goal. They may well be right, as it is not just a new idea. Many have already tried it and they sing its praises.

You may think that with all of the advantages an LLC business offers it must be a fairly difficult and expensive endeavor. However, you would be wrong, as most experts say that with all of the LLC information available, the process is much easier and less expensive than forming a corporation and it just may be the best decision you have ever made.

One of the first steps to be completed is to name your company; be sure to check with your state to see if your choice complies with your particular state's LLC rules. Some of the more common rules are obvious, such as making sure there is not another LLC on file with the same name. Of course, since you are going to form a limited liability company, the name must end with an LLC designator such as «Limited Liability Company» or even «Limited Company» or an appropriate abbreviation, such as «LLC» or «Ltd. Liability Co.» Most states have certain words that are prohibited, such as Bank, Insurance, City, etc.

Of course, as with everything else, there are some disadvantages as well. Corporations can be around forever, whereas an LLC business is dissolved when a member dies or undergoes bankruptcy. A sole proprietorship or partnership is a little less complex and includes less paperwork than a LLC, yet that certainly does not mean that the paperwork is not worth the effort.

When you form a limited liability company, there are steps that must be followed. While some are specific to certain states there are others that are common in all states. Typically, these would be to file the Articles of Organization with the Secretary of State and should include the company name, plus remember that most times it needs to end with an LLC designator. You will need to state the nature of your business or purpose and you will need to list names and addresses of the organizers. However, normally, you only need to list one.

Dave Mackay encourages you to submit your articles by going to Article Content King. Eager publishers are waiting to use your articles on their blog or website with your links and content unchanged allowing you to earn money from your sales so you can improve the quality of your life. There's even an opportunity to control all the advertising on your article pages. Sign up at Article Content King and open your membership account today.

Permanent link: Form a Limited Liability Company (Write a comment).
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