What Is an LLC? These Are the Key Things to Know

When you think of the American Dream, you might think about a job that pays well and a house in the suburbs.  You might also think about taking your success into your own hands and starting your own business (you can form an LLC, partnership, or corporation depending on your needs).

When you’re forming a corporation, there are many different forms corporations can take. One of the most common forms is a limited liability company (LLC).

What is an LLC? Read on to find out!

What Is an LLC?

An LLC is a limited liability company, which is a very straightforward way of classifying a company whose owners are not personally liable in the event of a lawsuit. In fact, the sole function of an LLC is to protect the owner’s personal assets.

Owners of LLC are typically called members, and there is no limit on the number of members an LLC can have.

LLCs are flexible in that they can have features of other types of business entities like sole proprietorships and partnerships with those of a corporation. LLCs, like S-corps, are eligible for flow-through taxation.

What Are the Benefits?

There are many benefits to starting an LLC.

The most obvious benefit is the limitation on the liability of the members. In many instances, if a company finds itself in court and is insolvent, the court can pull from the owner’s personal assets to satisfy any judgment awarded in a lawsuit. An LLC shields members from this level of liability.

In addition, LLCs are much easier to form than a traditional corporation because there is no state or federal requirement necessary to start one. Members can manage the business themselves or they can hire someone from outside to take care of the day-to-day. In addition, members can divide profits as they see fit and outline their profit-sharing scheme in their operating agreement.

How Do I Create an LLC?

Starting an LLC is fairly simple. You’ll want to choose a name for your business and then select a registered agent in the state in which you are filing to incorporate. Finally, you’ll want to draft an LLC operating agreement and file your articles of organization with the state.

Don’t forget to obtain any licenses or permits needed to operate in your chosen state.

If you don’t want to go it alone, then there are people out there who can help you. Try looking for the best LLC service, it will help you go a long way toward reaching your goal of launching your own company.

Need Help Starting Your Business?

Now that you’re no longer asking, “what is an LLC?” you can get started with making your business a reality. LLCs have many benefits, but it’s important to weigh those against other forms like partnerships when deciding how to form your business. If you’re not sure which route to go, it’s always helpful to speak with an expert to explore your options.

Do you want to stay on top of the latest news and trends in business? You’re in luck! Check out the rest of our blog for everything you need to know about running a successful business!