What is an LLC? Limited Liability Companies Explained

What is an LLC? Limited Liability Companies Explained

What is an LLC? It stands for limited liability company. The limited liability part means that the LLC owners, which are called the members. The LLC members are not going to be personally responsible or personally liable for the LLC’s debts or liabilities. So that’s where that limited liability part comes in, is it limits the liability to the members themselves. If the LLC is sued, the members don’t risk losing their assets in that lawsuit. That is why it is important to study carefully by reading llc service reviews before getting it.

An LLC is a business entity that is formed and recognized at a state level. In other words, it’s the state, not the federal government, not any local government, the state government that you will deal with to form and maintain your LLC. And then, all of the laws of the state where the LLC is formed will apply to that LLC.

Protect Small Businesses

entrepreneur open businessBefore then, most businesses were either structured as corporations, where the shareholders are the owners, and a board of directors runs the corporation. There’s double taxation because the corporation has to pay its corporate taxes. Things were either formed as corporations or as partnerships where there are one or more people involved.

The partners manage and run the business but are personally liable for all of the debts and liabilities of the partnership itself. But there is no kind of corporate tax; the partners are taxed at the individual level for the partnership income. So, most things were either partnerships or corporations. Businesses are clamoring for some new way to combine the two worlds and have the best of both.

Simple Business Structures

planning structure organizationLLC wanted the management and tax ease of the partnership, but the liability protection benefits that the corporation gave. Thus the LLC was born, and then eventually, the IRS got on board. Compared to corporations, in particular, LLCs are relatively easy to form and maintain. It is a straightforward business structure. The structure of an LLC can be flexible, and in most states, there are minimal requirements as far as ongoing compliance and regular filings. It varies from state to state because each state has its laws regarding LLCs. Still, for the most part, and especially compared to corporations, LLC members can freely change the management tax structure, really whatever portion of the LLC structure that they want to.

How is an LLC formed?

LLCs are established by filing a document. It is typically called certificate of formation, depending on the state. You would file it with the secretary of state in the state where you want to form the LLC. In many states, the LLC officially exists as soon as the articles of the organization are filed.

Having a Lawyer for Your Business

Having a Lawyer for Your Business

In the year of 2018, it is considered normal or perhaps a staple to have a lawyer in your business. There are many things to consider when having a lawyer and why you should have one by your side, which are the complicated legal complication stuff while also taking care of lawsuits. So yes, having a lawyer might cost you some money as their service is not cheap but trust us that having one in your business will protect your business from any lawsuits that could lead you to lose more money. If you want to know why you should have a lawyer for your company, make sure to read this article.

Consultation

lawyerYou can always consult a lawyer regarding steps that you’re going to take in the business. Although this seems like something that you shouldn’t even bother to ask, it can save you from a trap. Specific steps that you take can easily lead you getting sued, and this is where an experienced lawyer can keep you away from this kind of situations as they’ll give you their unbiased opinion about your decision and how you can improve your business without violating any laws.

Paperwork

Starting a business can be quite hard, especially when you don’t have much knowledge when it comes to legal and paperwork. It’s a good idea to consult a lawyer regarding paperwork as they’ll help you with what documents are needed and how you’re going to take care of it. Filing patent or taking care of taxes will not be as hard as taking care of it alone, so make sure to get a lawyer as soon as possible to play it safe.

Mitigating Damages

This one is the real reason for why you should have a lawyer for your business as they can mitigate damages from charges. Let’s say that you get charged, and you can’t win the case, which means you have to pay the fine for the case. With a lawyer by your side, they can at least ask for reduced charges (depending on the experience and the skills that they have) And at the same time, having a lawyer can yield to you suing more than you should get when you’re suing someone for injury or cases in your business.