Limited Liability Company Formation and Registration

A limited liability corporation (LLC) is a type of company structure available among other States to the people of the United States. Compared to other nations, this business registration model is fairly new to the US. I strongly suggest you to visit Create a 501c3 to learn more about this. The first state to legislate laws that allowed a limited liability company to be licensed was Wyoming only in 1977. Since then, more and more states have taken up the business pattern as an option for company registration and by 1997, only 20 years after its introduction to the US, all 50 states had adopted this form of business model. The main reason this business model is followed is the benefits it offers to the shareholders and the versatility it provides in the creation of a company.

Attributes of a Limited Liability Company A limited liability company enjoy the benefits of both a business and a partnership. The company restricts the responsibility on the capital investments that can accrue to the shareholders. This also reduces the danger the shareholders are exposed to. This is an benefit it draws from the form of company in the organization. However, the business model, on the other hand, has its taxes which apply directly to shareholders (members) as opposed to the company itself. In other terms, the organization figures out the gains and expenses, shares the income or gains to the specific members and then personally levies tax on shareholders. The LLC is not a tax classification and therefore the members apply a form 8832 and select the tax alternative for taxation either as a corporation, as a sole proprietor or as a taxable associate. That is a similar advantage to Partnerships. The benefit of this business model is that there is no double taxation. The company is first taxed directly in a corporation and then the shareholders are taxed once again on their share of the profits. This company registration model therefore helps members to benefit from the key advantages of both companies and partnerships.

Enterprise creation for a limited liability company may be other LLCs, associations, corporations, individuals or international entities. Many jurisdictions, however, have specific restrictions on single-person corporations, so you will need to seek more guidance on the single-person LLC company registration.

Limitations of LLC Companies Not all business models require an LLC to be registered for the company. The business models are especially ideal for small to medium size enterprises. It is not appropriate for financial institutions such as banks and insurance firms to conduct their business as limited liability companies. To run, they’ll need to form a company. In the same form of business model, non-profit making organizations do also not apply for company registration. The charity organization will still operate the directors or members autonomously and therefore this model won’t work. There are other state limitations to an LLC enterprise creation and you will need to confirm the certification of your business model type in your state.

Formation process To register an LLC, you will be expected to fill out the applications forms from the state-designated office. The Articles of Organization are to be attached to the application which includes membership structure, capital investment, form of company among other business information. You would also need to have an Operating Agreement that defines the manner in which the company is managed.