What is an LLC?
A limited liability company (LLC) establishes your business as a legal entity distinct from you as its owner, protecting you personally from liability. Forming an LLC also prompts practical conversations if you co-own a business with partners regarding responsibilities, departure, and profit-sharing. These decisions get outlined in writing during LLC formation.
Knowing how to write LLC operating agreements is imperative if you plan to run this type of business. The agreement will clearly outline what members own, how the LLC will be managed, and other key legal matters. If not, the LLC may face issues with its operations and ownership team that could have been avoided.
LLCs are likely the best entity for business owners who want to raise capital but do not want pressure from investors to generate returns on their investments and create a firm exit strategy.
A limited liability company (LLC) is a popular business structure for startup businesses. LLCs are formed in accordance with state law and have the benefit of providing limited liability protection for the owners.
If you recently formed a Limited Liability Company (LLC) or incorporated, you have taken an important step toward setting the legal foundation for your business and protecting your personal assets.
Forming an LLC can provide you and your business with a variety of benefits. Organizing your company as a limited liability company requires some careful steps and documentation to ensure that you are following the law.
Benefits of Forming an LLC
- Limited liability
- Clarity with business partners
In this guide, I’ll tell you everything you need to know to start an LLC, what a limited liability company (LLC) is, the differences between LLCs and other business structures, and some of the pros and cons of LLCs, as well as the cost of LLC formation.
How to Form an LLC
Step-by-Step LLC Formation
To set up an LLC, follow these steps:
- Select Your State
- Name Your LLC
- Choose a Registered Agent
- File Your LLC
- Create an Operating Agreement
- Get an EIN
- Understand Structures and Consider Drawbacks and Tax Implications
The agreement outlines LLC ownership, management, and key legal matters. Even single-member LLCs need one outlining operations. LLC names must contain "LLC," "L.L.C." or "Limited Liability Company." Most states require adding "LLC" on records, contracts, tax returns, letterheads, etc. You need an original name not used by another company in your state.
Forming an LLC provides liability protection and prompts conversations if you co-own a business regarding responsibilities, departure, and profit-sharing. These decisions get outlined in writing during formation.
Knowing how to write operating agreements is imperative if you plan to run an LLC. The agreement will clearly outline ownership, management, and key legal matters. If not, the LLC may face issues with its operations and ownership team that could have been avoided.
LLCs are likely the best entity for owners who want to raise capital but do not want pressure from investors to generate returns on investments and create an exit strategy.
LLCs are popular startup structures. LLCs provide limited liability protection and are "pass-through" entities for tax purposes.
If you recently formed an LLC or incorporated, you have taken an important step toward setting the legal foundation for your business and protecting your personal assets.
Forming an LLC can provide you and your business with benefits. Organizing as an LLC requires careful steps and documentation to ensure you are following the law.
An LLC establishes your business as a legal entity distinct from you, protecting you personally from liability. Setting up an LLC prompts conversations if you co-own a business regarding responsibilities, departure, and profit-sharing.