The Limited Liability Company is another Good Business Organization
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Limited Liability Company
The limited liability company (LLC) is a relatively new form of business organization in the US, but is available in every state. You can pay taxes as an individual and you have good liability protection. Check your state, but mostly you must have at least 2 owners to form an LLC. You issue sharesof stock but stock certificates are not required. An LLC is a great choice for a small company if you have foreign owners or investors, as they are restricted from participating in an S Corp.
An LLC files Articles of Organization with its home state rather than the Articles of Incorporation that a corporation would file. An LLC in some states has a built in dissolution date i.e. the comapny can’t have an unlimited duration, but states are examining this and many of them are changing the laws.
A key component to the Limited Liability Company is a separate document called the Operating Agreement (or Management Agreement). You can file a pro forma operating agreement easily enough butin general you dowant tospellout the obligations of the members of the company in some detail,this is where your lawyer makes his money:)
Pass through taxation is really the chief benefit of the LLC. You can reflect the profits or losses of the company in their entirety on your personal income tax returns this means that you will not suffer double taxation on corporate profits.
Like I said, check your state but if the fees are not too much (I’m looking at you California) then an LLC is often the best choice for a new company with multiple owners.
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