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 Formation of 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 be followed. Therefore, is necessary to understand the rules of the state in which LLC is to be formed.