Everything You Need to Know About LLCs
The business classification of LLC or Limited Liability Company can offer a corporate structure with significant benefits for business owners. This structure defines of owners that are defined as members. These members can be individuals or businesses, but they have liability protection from the LLC and its creditors. There are certainly many details that you should know in considering an LLC status, so be sure to consider all of these factors before making your choice.
Advantages of LLCs
There are many advantages of the LLC status, including implications for your protection, taxes and management. For many, being protected from the liability of the company is a huge advantage, considering if the business goes under, typically the individuals are not personally liable. While the individuals are protected, they also have the flexibility of managing the corporation. It is important to note that an LLC can be taxed on the members and not on a corporate level which can prove beneficial for many. Taxes are not the only financial implication, as the fees for filing for LLC status and maintaining this status are relatively minimal in comparison to other types of fees to be aware of.
Disadvantages of LLCs
While the LLC status can prove to be a beneficial corporate structure, there are limits to the protection and other benefits to be mindful of. There are restrictions to the protections of your personal assets and a court can deem you financially responsible in certain cases. As for the other financial implications, members of the LLC can be responsible for paying self-employment taxes which is something owners should keep in mind when filing taxes.
Beginning the Process
When you begin the process of filing to become an LLC, you will need a unique name for your business, a registered agent, articles of organization, an employer identification number, an operating agreement and a business checking account. While these are not all required at the start of filing but rather components of the process, these will be required steps. The timeline to process an LLC status will vary by state, but typically four to six weeks can be expected, and this can also be impacted by how prepared you are throughout the process.
The Limited Liability Company status has increased exponentially in popularity over the past several decades, considering the benefits that they offer their owners. It is important to understand that starting a business is no small undertaking and should be navigated only after proper planning and preparation. If you are cognizant of each step in establishing this corporate structure and what is necessary along the way, you will be sure to reduce the anxiety of starting a business.
