An LLC or Limited Liability Company is a state governed entity that acts like a hybrid between a corporation and partnership. LLCs are very easy to maintain and have become the most popular entity structure to file in recent years because of:

  • Asset Protection.
  • No annual meeting or minutes are required.
  • They do not issue stock.
  • Offer a pass through taxation treatment.

Most small business owners like to keep things simple and filing an LLC for their business provides them the assett protection they need without the “red tape” of a corporation.

Packages starting at $99

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What does LLC stand for?

LLC stands for Limited Liability Company.

Who owns an LLC?

The owners of an LLC are called Members. The members own the company based on how much they contribute to the LLC.

Example: Tom and Mark go into business together. Tom contributes $6,000 to the business and Mark contributes $4,000 to the business. Since the total contribution was $10,000 and Tom contributed $6,000, he would own 60% and Mark would own 40% (since Mark only contributed $4,000.)

How many owners are needed to open an LLC?

There are no requirements as to how many owners are needed in order to open an LLC. An LLC can have one owner or a thousand owners. The taxation will vary if the company has a single or multiple members.

How is an LLC taxed?

There are no requirements as to how many owners are needed in order to open an LLC. An LLC can have one owner or a thousand owners. The taxation will vary if the company has a single or multiple members.

 

There are three ways in which an LLC can be taxed:

  • Default – In the eyes of the IRS, all single member LLCs are taxed as if they were a sole proprietorship. All multiple member LLCs are taxed like a partnership. All multiple member LLCs are taxed like a partnership.
  • Corporation Tax Election (Form 8832) – An LLC can elect to be taxed like a General for Profit Corporation by filing Form 8832 (not very common).
  • S-Corporation Election – The IRS now allows LLCs to elect S-Corporation status. This allows the LLC to have the tax benefit of an S-Corporation with the flexibility of an LLC structure.

What is a Registered Agent?

A Registered Agent is a person or authorized entity, who can accept legal documents and notifications from a government office on behalf of an LLC. All LLCs must designate a person or entity to act as their registered agent. The agent can be anyone in the state as long as they are at a physical location and available during normal business hours. Our office includes this service in our package in order to ensure proper state requirements are met. For more information about our registered agent services click here.

What will I receive in my package?

All standard packages include the following:

  • Filed Articles of Organization
  • Customized Operating Agreement
  • Meeting Minutes
  • Membership Certificates
  • Registered Agent Service for 1 year
  • Document Storage
  • Compliance Reminders

What is the process once you complete an order?

  • Review & Processing – Your order will be reviewed and processed by one of our document filing specialists.
  • Signature – Documents need to be signed.
  • State Approval – the documents will be sent to the state for approval.
  • Completion – Once we receive the final paperwork back from the state, we complete your order and send the final documents for your records.

What is the difference between an LLC and a corporation?

The main differences are the formalities. Corporations are required to hold annual meetings, take meeting minutes and issue stock. With an LLC, the company is not required to hold meetings, take minutes or issue stock. Do to the fact that there are far less formalities in an LLC, they have become a very popular entity structure in recent years. If you have questions, please contact our office toll free at (888)-DoMyLLC (366-9552).

What is required once the LLC is completed?

Most states require that LLCs file an annual report and pay a filing fee. The company is also required to file taxes just like an individual. Our office can assist with the annual report filing, however, we are unable to assist with taxes (speak with a CPA or tax professional). To find out if your state requires an annual report or to get more information click here.

Advantages of Forming an LLC

How to Form an LLC

LLC v. Corporation

LLC v. S-Corp

Comparison Chart – Compare all entity types to determine the proper structure for your business.

Ownership of an LLC

The owners of an LLC are called “members” and the members own the company based on their contribution to the company. For example:

Kohen and Reaghan decide to open up a trucking company. Kohen is going to be driving the truck and hauling the goods while Reaghan is going to run the day to day activity of the business. Kohen owns a big rig valued at $40,000 that he is going to put in the business and Reaghan is going to contribute $50,000 cash giving then an initial contribution amount of 90,000. To find out the percentage of ownership use the equation below:

Member Contribution / Total Contribution = Percentage of Ownership

Kohen’s Ownership Percentage – 40,000 / 90,000 = 0.444 which is 44.4%
Reaghan’s Ownership Percentage – 50,000 / 90,000 = 0.666 which is 66.6%

If the two members decided to the sell the company and received $750.000, Kohen would get 354,000 and Reaghan would get 396,000.

LLC Maintenance

With nominal maintenance requirements an LLC offers the assett protection of a corporation with the flexibility of a sole proprietorship or partnership. Although the company is not required to hold annual meetings or record minutes like a corporation it offers the same assett protection. Owners of an LLC are not responsible for the debts of the company.

There are no internal formalities in an LLC, however the company is required to complete state annual report requirements and file taxes.

Kohen’s Ownership Percentage – 40,000 / 90,000 = 0.444 which is 44.4%
Reaghan’s Ownership Percentage – 50,000 / 90,000 = 0.666 which is 66.6%

If the two members decided to the sell the company and received $750.000, Kohen would get 354,000 and Reaghan would get 396,000.

LLC Taxation

One of the many benefits of filing an LLC is the flexibility in which the company can elect to file taxes. An LLC has default taxation; however it can elect a different tax status. The taxation of an LLC is as follows:

Default Taxation – single member LLCs are considered a disregarded entity by the IRS and are taxed like a sole proprietor. Multiple member LLCs are taxed like a partnership.

Corporation Taxation – An LLC can file Form 8832 and be taxed like a C-Corporation (Not very common).

S-Corporation taxation – The IRS now allows for LLC to elect S-Corporation status. This allows the LLC the tax benefits of an S-Corporation with out the corporate formalities of a Corporation.

** Before making any taxation elections please make sure you speak with an accountant.

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For more information on how we can help you start an LLC please call our office toll free at (888)-DoMyLLC (366-9552). ORDER NOW!