| Copyright (c) 2010 Michael Jagoda | | | | traditionally taxed as a sole proprietorship or |
| What is an LLC? LLC stands for Limited Liability | | | | partnership, they can also elect to be taxed as a sub |
| Company. A Limited Liability Company is a legal | | | | chapter s corporation. LLCs have what is known as |
| business type that handles daily business activities like | | | | pass-through taxation which differs from the double |
| a sole proprietorship for single member LLCs or a | | | | taxation associated with c corps. Members of an LLC |
| partnership for multi-member LLCs. Forming an LLC | | | | will only be required to pay taxes on their earnings |
| provides personal limited liability protection for the | | | | instead of paying both corporate and individual taxes |
| owner(s) much like a corporation. However, since it is | | | | on the same earnings |
| not a partnership or a corporation, owners are not | | | | Unlike a sub chapter s corporation, which limits the |
| called partners or share holders, they are known as | | | | number of share holders, there is no limit on the |
| "members". | | | | number of members an LLC can have. Also LLCs are |
| LLCs can offer many benefits if you own a small | | | | not required to have bylaws, hold meetings or record |
| business. They're easy to form and for the most part | | | | minutes. However, it is a good practice for the |
| there is not much paperwork involved in the initial LLC | | | | members of an LLC to develop an operating |
| filing. Limited liabilty companies can provide personal | | | | agreement which outlines how the affairs of the |
| asset protection for their members. In most states you | | | | business will be conducted. |
| can maintain the company's good standing by filing an | | | | Another great benefit if your form an LLC is the |
| annual report and paying the state's annual fee. | | | | transferability of ownership interest. The company will |
| Further, as long as you operate and maintain the LLC | | | | survive even as changes are made to the |
| properly and follow your states compliance statutes | | | | membership of the LLC. |
| your personal assets should be protected in the event | | | | As an LLC, you also have more options available to |
| that the LLC is ever sued! | | | | raise capital. You can admit new members by selling |
| LLCs provide additional benefits since they are a | | | | membership interests. You can even create new |
| combination of partnerships and corporations. In doing | | | | classes of membership interests with different voting |
| this, an LLC is less formal and more flexible than a | | | | or profit sharing characteristics. |
| typical corporate setup but it also offers protection and | | | | LLCs offer many advantages and benefits for small |
| even certain advantages that are the same as those | | | | business owners. They are fairly easy to set up and |
| of a corporation. For example, members of a properly | | | | offer personal liability protection for their members. |
| operated and maintained LLC should not be held | | | | Flexibilty and tax considerations offered by LLCs |
| personally liable for company debts. Their assets are | | | | make them a viable business structure and worth |
| also separated from those of the LLC, so personal | | | | sonsideration when deciding what is right for your |
| assets are afforded protection as well. | | | | business. |
| Another advantage of an LLC is that while they are | | | | |