Enjoy liability protection by Forming an LLC
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Posted On :
Dec-22-2011
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Article Word Count :
510
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This article looks at the benefits of forming an LLC venture. Additionally, it provides the reader a brief comparison of between a corporation and an LLC. Lastly, this information provides details on what will happen after filing for an LLC.
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A Limited Liability Company is possibility every businessman's dream. By forming an LLC, industries covering anything from real-estate to construction will reap numerous benefits and supply more possibilities for the firm and its clients.
For many who are not aware of what an LLC is, here's a brief description. LLC is a business structure that permits your company to enjoy legal responsibility like those of a corporation while staying away from annual reports, share distributions, bylaws, and other necessities when setting up a company.
Forming an LLC is useful especially to new businesses. It merges control and tax advantages of a partnership while having the advantage of limited accountability. LLC members are shielded from liability for business debts or claims. An LLC is a lot more flexible than a corporation simply because owners can be individuals, trusts, partnerships, corporations and non-resident aliens. Plus maintenance is easy; LLC has significantly less formalities and easier than managing a corporation.
Differences of forming an LLC vs. Incorporation
- Corporations are owned via share of ownership or stocks that are distributed to stockholders. An LLC, like partnerships, is owned by the members or the managers of the business.
- Unlike an LLC, corporations require holding yearly meetings and having written minutes. There's significantly less paperwork in LLC as they do not have those requirements.
- A corporation needs to pay taxes for profits at the corporate tax rate. An LLC however is a "pass-through" tax entity. That means the gains or losses made by the company will appear on the personal income tax return of the owners. Double taxation of paying corporate tax and personal income tax therefore are sidestepped.
What you should expect after filing an LLC
Once you have decided to apply for an LLC, you are going to receive two articles with a CD detailing the documents. The two articles are the Articles of Organization and the operating agreement. They will come along with the corporate or LLC kit.
The Articles of Organization formalizes your existence under state law. Once you have filed this, you've got a legitimate business up and running.
This document reveals the name, purpose, incorporators, amount and types of stock that may be issued and any other special characteristics of the business. The Operating Agreement in contrast, contains the written rules for conduct of the LLC. Examples include meetings, elections of a board of directors and officers, notices, types and responsibilities of officers, as well as other standard protocol.
You'll also have a registered agent who could acknowledge official documents for you. Examples of the documents you will be acquiring are tax notices, annual reports and legal-process documents like summons, etc.
The last steps contain things such as filing for an Article of Amendment to reflect the transformation of your firm from a corporation to an LLC. You also need to file an Initial or Annual Report. Business filing experts will help process required changes in your business.
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Article Source :
http://www.articleseen.com/Article_Enjoy liability protection by Forming an LLC_123371.aspx
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Author Resource :
Anthony Hoffman is an entrepreneur who uses the process incorporation and is contemplating forming an llc.
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Keywords :
incorporation, forming an LLC,
Category :
Business
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Business
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