Business owners have the luxury of choosing from a variety of business structures that will fit their long and short term goals. If you are looking for a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation then a Limited Liability Company (LLC) might be the right vehicle for you. Although it is not a corporation, an LLC is a legal form of a company that provides limited liability to its owners in many U.S. jurisdictions.
Some of the benefits of operating an LLC are:
Flexibility: Through an operating agreement, members of an LLC are able to create a more flexible management structure and how it will be governed. State statutes typically provide automatic or “default” rules for how an LLC will be governed unless the operating agreement provides otherwise.
Limited Personal Liability: Because an LLC is legally separate from its owners, its personal liability is limited. LLCs are responsible for their own debts and obligations, and although you can lose the capital you have invested in the company, personal assets such as your home and bank account can’t be used to collect on business debts. Personal assets are also protected if an employee, business partner or the business itself is sued for negligence. The only time you may still be personally liable, is if you personally guarantee a business debt or fail to use due care resulting in harm to a third party or a breach of your duties to your LLC.
Avoidance of Double Taxation: Pass-through entities don’t pay income taxes at the corporate level. Instead, corporate income is allocated among the owners, and income taxes are only levied at the individual owners’ level.
Similar to corporations, there are variations of an LLC that can be created. Depending on the state law, you have the ability to set up a:
Like other types of companies, a limited liability company is formed in the state in which the company does business. Most states have the required forms at their website.
The company must register as a specific LLC in the state, filing a form such as “Articles of Organization” or a similar type. With its’ members, the LLC should also create an operating agreement to spell out how to run the company and what happens in various circumstances. In states like New York, there is a post filing requirement to publish notice of the formation or qualification of your LLC.
UCS is with you every step of the way by providing the necessary forms to file with the Secretary of State as well as assist with drafting and submitting to the proper department. UCS also provides a registered agent office which is required in most states.