Limited Liability Company or LLC is relatively a new business structure in the United States. IRS does not have an individual classification for LLC’s as yet and classifies them under one or the other of the existing classifications. LLC owners can elect to be taxed under the most beneficial classification. By default a single member LLC is treated as a disregarded entity as in sole proprietorship and multiple member LLC’s as partnerships. Basically LLC taxation has a pass through advantage.

Members of LLC’s can report the profits from business through their personal tax returns in a prorated manner. Members of LLC can also elect to be taxed as a corporation if it is beneficial to them.

Forming LLC is not complicated or cumbersome. Formation of limited liability companies are governed by the state statutes. Rules and regulations for forming LLC differ from state to state. You have to consult the state agency dealing with LLC registrations and comply with the procedures required by the state to form LLC. You can organize the LLC yourself by understanding the requirements in forming LLC. All states provide clear instructions on how to form LLC. All you need to do is read those instructions carefully and do what is necessary.

For forming LLC, the first step is to get a name to register your business. The name must not be one that is used by an existing business in the state. Some states have the name availability check as an option in registering your LLC. You may check other sources also to avoid any issues of Intellectual Property infringement later on. Once you have an available name to register your LLC you have to file the LLC articles of organization with the state authority. Some states require a LLC operating agreement and a publication of the intent to form LLC.

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