As your business grows, protecting your assets and your company becomes increasingly important. Forming an LLC is one way you can do that.
A limited liability company is defined as a corporate entity whereby the owners (called members) are afforded “limited liability” in most circumstances involving the company. The LLC is registered at the state level, and if the LLC is properly managed, only the LLC itself (and not the owners) are liable for the debts, liabilities, and obligations of the LLC.
A LLC becomes a living entity through the actions of the owners, and business is conducted through the entity. LLC’s provide liability protection, flexibility, tax advantages and survivability for its owners, among other benefits. Anyone operating a business as a sole proprietorship or partnership, without state registration, would benefit by forming a LLC.
LLC’s provide a formal business structure that permits specific ownership levels and responsibilities among the owners, as well as the owners to take advantage of the many important benefits that LLC’s offer (see below).
Because LLC’s conduct business, it’s very clear what assets are owned and managed by a LLC, which greatly simplifies an owner’s ability to sell the business at a later date.
LLC’s are an excellent choice for most business owners, and unlike corporate entities (such as S-Corporations or C-Corporations), most states do not require annual or bi-annual reports, and they are simpler to setup and maintain. They are also less costly to initially setup, because of their simplicity.
Furthermore, by forming a specific entity at the state level, it forces the owners to specifically define ownership percentages and powers, which helps reduce the chance of confusion, misunderstanding, and conflict among the owners. Second, business entities such as LLC’s can take additional tax exemptions that are unavailable to individuals, such as sole proprietors (health insurance is an example of this). Third, a LLC shields the owners from most types of personal liability that could occur while conducting business. Fourth, a LLC will survive even if the only owner dies. This helps maintain value for family survivors, employees and the estate of the owner. Fifth, a formal structure such as a LLC permits the owner to partner with others at different levels of participation, by carefully controlling ownership levels, providing flexibility in how one partners with others.
LLC’s permit you to bring on partners at different, clearly defined levels. This means you can have “silent partners,” “minority owners,” “investors” and more, and clearly, indicate roles and responsibilities. It is relatively easy to admit or remove members, depending on the circumstances and the needs of your business.
LLC’s enable you to separate important assets or business functions, giving you the ability to vary or alter ownership among these assets or functions. You can also sell off or merge such assets or functions much more easily than if all your assets or business functions were in one large whole.
A LLC provides tax advantages over a sole proprietorship or partnership, in that the IRS permits more deductions. For example, medical insurance expenses. Consult your tax advisor for more information about the tax advantages associated with a LLC.
Sole-member LLC’s are considered “disregarded entities” by the IRS, which means the profit, losses, and expenses flow through your individual Schedule C on the 1040. Multi-member LLC’s can be considered S-Corporations (the default), C-Corporations or partnerships, depending on what you tell the IRS.
Starting an LLC is easy with Law 4 Small Business. You just need two things to get started:
We have made it easy to get started. All you need to do is fill out our easy LLC Formation Questionnaire.
We built an AI-based intelligent interview system that will ask you a number of questions, and make an entity suggestion and state choices based on your answers. It is very sophisticated, and factors such issues and preferences as tax (including the Trump Tax Reform Act of 2017), anonymity, locations where conducting business and much more.
This is a BETA / PROOF-OF-CONCEPT! Please pardon the dust!
Forming your LLC with L4SB puts experienced business lawyers on your side. We ensure your business is properly registered in the state of your choosing, and we offer competent, sound legal advice to help you maximize the benefits and potential of your new LLC.
If you chose L4SB as your registered agent, it means you have licensed attorneys acting as your registered agent, unlike the other guys across the wire. This means your LLC benefits from attorney-client privilege, and you can rely on the advice and counsel of competent business lawyers to advise you in all phases and aspects of your business.