One of the first things you need to do when getting your business off the ground is to choose what kind of structure it will have. An LLC (Limited Liability Company) is a popular choice of business setup for many entrepreneurs.
An LLC is formed by filing the required paperwork, such as Articles of Incorporation, with the state that the business will operate in. In an LLC, the owners the business (referred to as members) are not held personally responsible for the company’s debts or liabilities.
In other words, if an LLC is sued or goes into debt, members generally cannot be prosecuted individually.
Information about an LLC, including the name of the company, names of members, signing details, and more are recorded in an LLC Operating Agreement.
By default, an LLC enjoys a flexible personal tax structure similar to what you would find with a sole proprietorship or general partnership, which means that members are responsible for filing their earnings on their personal income tax returns.
However, the LLC can also elect to be taxed as a corporation, which opens up more options for how taxes are paid. Depending on the state, the business owner(s) can generally choose a tax structure that works best for them.
Limited Liability Companies
An LLC is a common business structure choice that is used by the owners of many different companies in a wide variety of industries. Like with any type of business decision, careful thought and planning should go into deciding whether an LLC is the right structure for your business.