If you are interested in starting up a small business, you may want to consider applying for a Limited Liability Company status. Forming an LLC can provide a multitude of benefits to its owners, otherwise known as members, such as legal protection, ease of operational procedures and flexible profit distribution.
The U.S. Small Business Administration outlines the following benefits of an LLC:
- Limited Liability. When you sign-up for an LLC, the individuals who become the members (owners) gain personal liability protection for business decisions or actions that occur out of the LLC’s dealings. For example, if the LLC incurs debt or is sued by an outside party, then the member’s personal assets are usually exempt from legal action taken on the business. But, remember, not all actions are completely exempt from wrongful acts, such as through those occurring from employees.
- Less Recordkeeping. Another attractive benefit to an LLC is its operational ease. There may be less registration paperwork required than of other business models. In addition, the start-up fees may be smaller.
- Profit sharing flexibility. An LLC has fewer restrictions regarding profit sharing. Members of the LLC are able to disseminate profits on their own terms. For example, the members themselves determine the percentage of profits or losses that each have earned. In addition, there are no restrictions on the amount of members that an LLC may include.
How to Form an LLC
To form an LLC, the first thing you need to do is to choose a business name. Then you need to file the articles of incorporation and create an Operating Agreement. You also need to obtain licenses and permits, hire employees (if applicable) and depending on your state, announce the formation of your business.
The benefits of forming an LLC are plenty, but if you need additional guidance in navigating the required documents, we are here for you. Visit the MaxFilings Knowledge Center and blog to learn all about starting an LLC, S or C corporation, and other types of small businesses.
If you have any additional questions, contact MaxFilings today. We will be happy to guide you through the process.
