All you need to know about Limited Liability Corporations (LLC)

LLC is about providing security with simplicity

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Before committing to anything regarding the formation of a business, there are a few terms and references that one needs to take into account. Just like any business transaction, an owner should never commit before doing their homework. Knowing upfront what is expected will make the process so much more seamless and aids in making a more informed decision.

One of the most important aspects of forming a business relates to the cost, and this varies from state to state. Costs range from between $50 to $500, with an annual amount of up until $100.

The business will be required to have a registered agent, an operating agreement, and articles of organization. What are these?

A registered agent refers to the nominated person or business who has the authority to receive and send legal documents on behalf of the LLC.

An operating agreement is a legal document that clearly outlines operating and ownership procedures. This is the most important document in the event of any lawsuits or disputes that should arise.

The articles of organization, also known as the “Certificate of formation” or “Certificate of Organization, are the legal documents that the business is required to submit to the state to officially form the LLC. These documents will list important information relating to the LLC’s name, purpose and the name and address of the registered agent.

How does tax work?

The profits pass through to the members so tax is paid on the share of an individual's earnings. In the instance where an LLC is composed of multiple members then it’s necessary to complete form 1065. Although the formation of LLCs is to prevent double taxation, one needs to remain mindful that there could still be several types of state-level tax still applicable to the LLC.

What does an LLC license entail?

The reality is that there is no such thing as an LLC license, one just needs to ensure that you follow the six-step process to form an LLC.

Select your state. Name you LLC. Choose a registered agent. File the articles of organization. Create an operating agreement. Get an EIN.

Technically speaking, there is not an LLC permit, instead of depending on the type of business and the state, certain licenses and permits may still be required. The necessary licenses that might be needed are determined by the specific kind of business owned. Therefore, businesses should familiarize themselves with business licenses and permits.

How long is the process for obtaining an LLC and is there a need for a lawyer?

From the date at which the formation documentation is received, the process can take between 2 - 3 weeks. For those who would like to speed the process up, this can be done at a fee of course.

Those planning to utilize a Professional LLC are advised to consult with a lawyer, but other than that there is no need to consult with a lawyer. After all, it is a mere six-step process and the best part is that there is guidance throughout the process. Then there is also the option of using the services of a professional service provider.

Lawyers are also useful for when there is already an existing LLC and there is a need to apply for an LLC in another state. This can be achieved by completing the forms for a foreign LLC.

What is the ownership and management setup?

LLCs are owned by its members, so there are no shareholders. Just like the company cannot sell shares on the stock market, so all earnings are split amongst members. An LLC is managed by its members, except for when a non-member is nominated to manage the LLC, as stipulated in the Articles of an Organization.

LLC is about providing security with so much simplicity. Understanding upfront aids matters along faster and allows for decisions to be made keeping the best interest of the business in mind at all times. Ready to take the next step, then click here.