A limited liability company (LLC) is a corporate structure that provides protection and security for its members. A limited liability company structure does not hold the members of the company responsible for any debts or liabilities that the company may owe.
This gives you the protection you might need from various liabilities. A limited liability company is a very flexible choice for those who are looking to set up their business. It can allow you to decide how you want to divide profits, assign manager roles, how your profits are taxed and much more.
A limited liability company has many aspects that are similar to that of a company, a partnership and a sole proprietorship. If you are looking for increased flexibility in terms of a company structure you may want to consider a limited liability company. It is easier to set up than other company structures and can be changed as your company needs adjust and grow. If you are looking for protection and personal security you should look at what a limited liability company entails.
Basic Steps for Setting up a Limited Liability Company
There are five main steps involved in starting a limited liability company. These basic steps include:
- Select your state
- Give your limited liability company a name
- Choose a registered agent
- File all of the necessary articles for your organization
- Develop an operating agreement
Benefits of Limited Liability Companies
Some of the main benefits of a limited liability company include:
- Business liability protection
- Personal liability protection
- Tax flexibility
- Protected assets
- Heightened credibility
- No restrictions of ownership
- Flexible profit distribution
- Tax returns
Disadvantages of Limited Liability Companies
Although there are many benefits of a limited liability company it is important to consider the disadvantages as well. Some of the main disadvantages include:
- Must be dissolved upon the death of a member
- Formation and ongoing expenses
- Difficult to transfer ownership
- Must be dissolved in the case of bankruptcy
- Not the best choice for companies set to go public
If you are considering setting up a limited liability company you need to fully think of your needs are today and what they may be in the future. You should research all of the legalities and taxation involved. You will need to stay compliant with tax laws and conditions. Look to hire an attorney or a lawyer that you trust to help develop and form your limited liability company. There are different variations of limited liability company structures so you should look at what each of them entails to ensure that you are creating the right one for your company’s needs. Make sure that you are completely in the know about what a limited liability company entails and how to best set yours up to benefit everyone involved.
If you are looking to grow your company while having flexibility to change roles in the future you may want to consider a limited liability company. It may also be a good choice if you are concerned about risk and want to minimize any possible liabilities.