It seems everywhere you look, names of companies end with the initials “L.L.C.” Why is the L.L.C the company of choice for many small (and large) businesses?
First let’s look at what the L.L.C. is. An L.L.C. is a “Limited Liability Company.”
An LLC is a company that limits the owner’s financial responsibility to their investment (exceptions apply: like fraud, personal guarantees, or an individual committing civil wrongs – more on these later).
For example if you create an LLC, and the LLC amasses a debt of millions of dollars, the creditors cannot come to you to collect. The creditors have to collect from the LLC, only above exceptions apply. This is one of the key protections inside an LLC.
An LLC is affordable
The LLC is the easiest and most affordable type of business entity to create (not including a sole proprietorship, as there is no legal creation of a sole proprietorship). There only has to be one person involved. Furthermore, as opposed to a partnership or a corporation no operating agreement is required for the creation of an LLC.
However, an operating agreement is necessary if the LLC has two or more people as owners. To create the LLC, the person (or persons) creating the LLC simply files articles of organization and publish these in a newspaper.
Unlike a corporation, there is no annual fee and no yearly filing for an LLC. The LLC continues to operate in perpetuity. Furthermore, ownership and management of the LLC are not necessarily public. The initial owners and managers are public, but unlike other types of organizations, there is no requirement to file an annual report.
As we said earlier, the main advantage of an LLC is the limiting of liability of the owners. The LLC becomes a legal, separate and distinct person. The LLC is responsible for the debts. The LLC enters contracts. The LLC makes the income.
But you should know, unlike the corporation, with an LLC, there is no separate corporate tax. The income, profit and losses “flow” to the owners. The owners list the income on a schedule on their individual tax returns: thus saving taxes.
Creating an LLC the right way with DeLozier Law can be easy and affordable. If you would like for us to help you create an LLC, give us a call, we are here to help. 602-464-9666.
G. David DeLozier, P.C., law firm; phone 602-464-9666; website: www.gddpc.com; email: email@example.com.