Thinking about going into business for yourself? Or maybe even with a partner? Perhaps you should start an LLC.
The LLC (Limited Liability Company) is a great opportunity for those who want the liability protection of a corporation but the simplicity of a sole proprietorship or general partnership. The owner of an LLC is not personally responsible for business liabilities like the owner of a sole proprietorship would be. The LLC is less hassle then setting up and maintaining a corporation. For instance the LLC is not required to do all the reporting (some but not all) a corporation would have to.
Also the taxes are simple. With the Limited Liability Company you can use the pass through taxation method. This will save time and money every year when filing taxes.
Owners of these companies are typically referred to as members. Another difference from a sole proprietorship and even a general partnership for that matter is that other businesses and such as a corporation or another LLC can be members (owners) of another LLC business.
Decide on Management Style Before You Start an LLC
There are two types of Management form for this type of company.
This is the most common form of management style. It is managed by the owners of the company.
This where either one of the members is assigned as manager or a outside party can be contracted to run the day to day operations of the company.
To start an LLC you do need to file the articles of incorporation. Also an operating agreement should be created. This agreement should specify the ownership of the company. Also how the company will be operated and managed. Finally it needs to describe how the company will deal with profits. It needs to clearly state how profits are paid out and what happens if a member passes away. Anything else of that nature needs to be spelled out in this operating agreement document.
Where to Go From Here – Business Basics
If you are looking into starting a business you are on the right track by using this finance blog as part of your research. Look into all your options before you make a decision.