What is a Limited Liability Company?
Limited Liability Companies are a relatively new business form in the United States, though they have a long-standing history in Europe. LLCs were first formed in the United States in 1977 and were granted pass-thru tax status by the Internal Revenue Service in 1988. As a result, LLCs can elect to be taxed like partnerships, only at the individual level when profits are paid as dividends. This yields a considerable advantage over C corporations, which are subject to double-taxation: once at the corporate level, and again at the individual level when profits are paid as dividends to the shareholders.
Similar to corporations, LLCs shield personal assets from business debt. However, note that LLCs have a limited life of about 30 years, depending on the state, and do not have stock (and thus do not get the benefit of stock ownership and sales). Currently, all 50 states recognize the LLC business form. LegalFilings can set up an LLC for you. All you have to do is provide us with the necessary information on your order form, and we will take care of the rest.
What filings (papers) are required to form an LLC?
Articles of Organization have to be prepared and filed to create an LLC, along with state filing fees and other initial fees.
Is an attorney required to form an LLC?
No. An attorney is not required for the formation of an LLC. LegalFilings can form an LLC for you and save you the time and money involved in using an attorney. However, if you are unsure about what business form is right for you, it is advisable to consult your attorney.
How many persons are needed to form an LLC?
Several of the states require only one person to form an LLC. However, many states require a minimum of two.
How is the ownership of an LLC evidenced?
An LLC issues certificates indicating the particular holder's percentage of ownership in the business.
What is the ownership structure of an LLC?
LLC owners are called "members." A member's interest in an LLC is represented by "interest" certificates. An LLC can be managed by its members, with each having a say equal to their percentage of ownership (unless the members hire managers to operate the business).
What are the differences between an LLC and an S corporation?
S corporations have restrictions that are not applied to LLCs. For example, S corporations are limited to 75 shareholders, while the number of LLC members is not subject to this restriction. Additionally, LLCs cannot issue stock, but rather, they offer "memberships." S corporations, on the other hand, issue stock and are owned by the shareholders. S corporations are managed by the directors and officers, while LLCs are managed directly by the members unless they hire managers. Furthermore, while S corporations have an unlimited life span, LLCs have limited lives (in most cases, around 30 years).
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