What it means to set up an LLC

A limited liability company, more commonly known as an LLC, is one of the most popular ways to structure a business.As with all business structures, there are some specifics for setting up as an LLC.

Whether your business as just you or multiple owners, it can be set up as an LLC.The reason that most business owners choose a limited liability company is because it offers the most flexibility.

If you choose to set up as a corporation, there are many extra duties that the owners are responsible for.But keep in mind, an LLC has less duties and regulations than a corporation, but a partnership has even less than an LLC.The main reason most people go with an LLC is because of the added freedoms.

The name limited liability company is a really good description of how the company is set up.When a company is an LLC, the owners hold a more limited responsibility.This means that in case of problems, the owners would only be responsible for the business capital, at most.So if a customer were to take them to court over a disagreement, the customer couldn't take the owners home and possessions.

When it comes to taxes, an LLC has the most flexibility.There a few ways that you can choose to be taxed each year.Most limited liability companies choose to be taxed as a partnership, it gives them the most tax advantages.

You will need to check the state laws where you live, not all states recognize an LLC as a company structure.If your state doesn't recognize limited liability companies, then you might look into what your other options are and the advantages and disadvantages of each.

For each state that allows limited liability companies, there are organizational rules.There are some rules for what is required of the business so that it can qualify as an LLC.These will all vary by state, so find out what your state requires before you make your final decision.

In an LLC you are not required to have a board of directors.This puts a lot of freedom in the owners' hands.A great way to make sure that a partnership in an LLC works out, most business owners sign an operating agreement.This states the expectations of each partner and what each will be receiving of the profits.Without this agreement, many LLC businesses fail because of an unharmonious partnership.

Your management set up can go one of two ways.You can be member managed or manager managed.In each state there are different specifications for each of these.But basically a member management is set up like a partnership structure and a manager management is more of a two-tier set up like a corporation.

The freedom is what gives the LLC structure such popularity.But make sure that you are complying with all of the regulations that are in place.The worst thing to do is to not follow the standards set out by your state for an LLC and have to change the structure once the business is up and going.

Setting up a limited liability company (remember that the C stands for company and not corporation) means starting a small business and making sure that you have covered your hide.There are other business structures that offer the same or similar liability coverage, but an LLC has the most flexibility.

Once you have done your homework, you will find the structure that is best for you and your business type.The key is to do your homework, you won't get far in the business world without a strong knowledge.