LLC refers to Limited Liability Company. This type of company is a hybrid structure such that it has various limited liability characteristics of a corporation, it is tax-efficient and is quite flexible in terms of its operation just like in a partnership. For LLC, its owners are called members.
Advantages of LLC Structure
- The LLC structure doesn’t involve any taxes at the business level.
- The profit and loss allocation is more flexible in this structure.
- The members are not responsible on a personal level for any debts or liabilities arising into the LLC.
- In case any new members are to be added to the LLC, a written consent of other LLC members is to be mandatorily obtained.
- Company management can be easily structured by the members.
- The LLC structure has a high credibility as compared to corporations.
- There are almost no ownership restrictions like that in the case of a corporation.
- The recordkeeping is limited for an LLC.
Steps Involved in Forming an LLC
- Choosing a business name for LLC
- Filing of Articles of Organization
- Creation of an Operating Agreement for LLC
- Getting business Licence and Permits
- Hire employees and announcement of business
Note: Not all states will follow the same sequence or require all the above steps to Forming an LLC . Therefore, is necessary to understand the rules of the state in which LLC is to be formed.