LLC Basics

Limited Liability Companies, or LLCs, are the most common form of business entity for small companies. Even though the LLC business structure originated back in 1977, it has become very popular in recent years for many reasons. It is a U.S. specific form that combines different aspects of partnerships and corporations, though keep in mind that LLCs are not corporations, though they both share the characteristic and benefit of limiting liability of its members.

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Their popularity is due to being easy to form, manage and maintain as well as their flexibility. Corporate formalities can be burdensome and unnecessary for small businesses, thus making LLCs a good option. No Start-ups most commonly use the LLC form as it is best suited for those

Typically, only two documents are necessary for forming an LLC. The first, called “articles of organization,” “certificate of organization,” or certifiation of formation,” filed with the Secretary of State, provides the basic information for the company such as the LLC name, address, agent for Service of Process. The second is an operating agreement. Also, a fee will need to be paid as well.

LLCs may not be a permissible business formation in many states for businesses that provide professional services which a license is required to practice (i.e., medical and legal services). Instead, there is an option to form a similar entity called a Professional Limited Liability Company (PLLC).