This state was Wyoming  and its laws were modeled after the German GmbH Code and the Panamanian LLC.  The laws allowed the LLC to be used for any lawful purpose except banking and insurance.  The original LLC laws were modeled to more closely resemble partnership structures.  This was noted primarily in the fact that they had limited life durations.   Florida followed suit and enacted LLC legislation in 1982.

Only a trickle of states followed in the next decade.  The reason the LLC did not take off back then had nothing to do with the state law attributes.  In fact, the LLC from inception provided a lot of flexibility and simplicity which is perfect for the small business.

However, the reservations existed because of tax concerns.  The IRS had yet to weigh in on how the LLC should be taxed.  And, when they did pass regulation, the provisions were confusing and difficult to apply.

It was not until 1988, when the IRS finally issued a ruling that treated a particular Wyoming LLC as a partnership for federal tax purposes.  As this point, more states started enacting LLC laws.  Still, there was much confusion over tax matters.  But, in 1997, the IRS adopted regulations that solved all the tax problems.  The LLC could, in essence, choose its tax strucutre.  More importantly, it would automatically qualify for pass through partnership taxation status.

This opened the flood gates for LLC formations.  The momentum grew even more as each state amended its limited liability company laws to provide for single member LLC entities.  At this point, it became a no brainer for every sole proprietor to use the LLC as a means to run his or her business and obtain the personal liability protection and other benefits offered.

The first step is to come up with a name.  Legally, every state generally will not allow you to use a name that is already registered with the state.  These names include not just other LLC entities but corporations, partnerships, and sometimes even state filed DBA registrations.  Spend the right amount of time coming up with a good name for your company and then check with the state to see if it is available for use as a limited liability company name.  If you are using a reputable formation company, they will check and ensure name availability as part of the filing.

The next step is to decide whether you will serve as the registered agent of the company or whether you want to retain a lawyer or a registered agent service.  If you are really cash strapped, then you can serve in this role as long as you have a permanent physical address in the state of formation where officially delivered documents (e.g., personal couriers) can be accepted and sign for during business hours.  However, the better choice is to retain a good national registered agent services company to handle this for you and your business.  This not only takes away the stress of compliance but also keeps your name off the publicly available registered office records.  Many marketers tap this database and send a lot of junk mail.

All states require an acceptable name and a registered agent.  Each state differs in what other information, if any, it requires as part of a limited liability company formation filing.  It is important to check with the corporation agency in our state for the list of mandatory disclosures and the required formatting of the filing documents.  Some states require the disclosure of members while others want a business purpose and principal office address.  Every state allows for additional provisions to be included if desired by the company.  For example, many companies want to include an indemnity provision to confirm protection of officers and managers.

Finally, the payment of a filing fee is part of every formation process.  Fees can be confusing in certain states.  This is because there is a standard fee and then potential add on fees.  Add on fees usually are for faster processing.  Processing time is very important.  Some of the more popular states like California and Delaware have extremely long processing times if you just submit the standard filing.  However, for a minimal expedite fee, you can get your LLC formed in just one or two business days.

You do not want to conduct any business or enter into any contracts until your limited liability company has been completely formed and a certificate of existence has been issued by the state.  Why?  Because your personal liability protection is based on the existence of a fully compliant legal entity.  In addition, it is a nightmare to start conducting business in your own personal name and then trying to properly transfer such activity into an LLC that has been formed after the fact.  It is done all the time as it is always better to start one  for business than not to at all.  However, even if you do, any business related obligations, lawsuits or activity that was conducted before will not be protected by a business vehicle that is later formed.

The main reason for using one is to create an independent and separate vehicle to run and conduct activity.  This separation from the owners of the limited liability company creates a layer of personal liability protection for the owners.  For example, if you start and run a business without a legal entity such as an LLC, you are completely and fully personally liable for anything related to your business.  This is because a business run this way (known as a sole proprietorship), is a part of you as a person.

By forming an LLC, you create a separate house to be the operator of the business.  This kind of entity is similar to a corporation when it comes to personal asset protection, but it is more suitable for the smaller business enterprise because it is a much simpler entity to create, maintain and manage.  In addition, it is a much more flexible entity than the corporation precisely because it was created to offer the benefits of a corporation without the disadvantages.  The LLC laws allow the owners to structure the ownership, management, and operation of the entity in a way that meets the needs of that particular business.  There are very little required formalities and requirements in the LLC laws.

Some people mistakenly refer to this entity as a limited liability corporation but it is not an incorporated entity at all.  The label of incorporated or unincorporated does not matter practically because you get the same level of protection.

Another advantage of a limited liability company is tax related.  With a corporation, profits are subject to double taxation and often you cannot take advantage of business loses immediately.  The LLC offers automatic and unqualified pass through taxation (also known as a single layer of taxation) and this results in less taxes and the ability to pass through losses that can be leveraged by the owners of the business to offset other income in many circumstances.  Check with your accountant for specific details.

Finally, the state legislatures of almost all 50 states are committed to continually improving the limited liability company laws to address any limitations or challenges that are faced as more and more people use it.  This has resulted in creating an even more perfect entity for small business.

As a result, the limited liability company has far outpaced the corporation when it comes to small business.  This is because it is ideal for many uses when it comes to running a private business, a joint venture, estate planning, asset protection strategies, real estate and self employment/consulting.

For the limited liability company (LLC), the LLC laws do not require this as an officially and legal requirement for LLC formation.  One of the key drivers behind the LLC as an alternate entity was to impose a smaller number of formalities that the legislatures did not feel were absolutely necessary for every legal entity.  Because the LLC is designed to best accommodate single owner businesses or ones with a small number of related shareholders, the states did not feel that an LLC organizational meeting should be legally required 100% of the time.

Having said that, it is a good idea to have one or to have the initial LLC owners prepare and execute what is known as a Written Consent in Lieu of Organizational Meeting.  Why?  First, it is good business planning and the subjects addressed in such a meeting (and approved by the consent) are ones that every business should address at the beginning immediately after an LLC has been formed.

Second, it is a sign that the owners are maintaining the independence and separateness of the LLC from themselves.  This is a key factor if an owner ever gets sued and a lawyer tries to persuade a judge that he or she should be held personally liable for an obligation of the LLC.  We all know that the essence of an LLC is that there is a shield of personal liability granted by an LLC but there is also an argument called “Piercing the LLC Veil” that aggressive lawyers will use to try to get at the owners personally.  By having formal documents as evidence that the LLC has all its required authorizations and is conducting business separate and apart from the owners, those lawyers will have a close to impossible chance of prevailing.

In other words, maintaining regular governance documents (similar to those maintained by a corporation) is a good practice and it should start off with holding and documenting an LLC organizational meeting.

If you would like a form that outlines the approvals and can be customized to be the Written Consent in Lieu of LLC Organizational Meeting, the LLC Expert offers one that you can purchase separately or as part of a Forms set.

The LLC Organizational Meeting form is FORM ONE (click here and scroll down to buy an individual form):

CLICK HERE NOW TO SEE LLC FORMS INCLUDING AN LLC ORGANIZATIONAL MEETING FORM

Related articles

• How to Form an LLC (thellcexpert.com)

LIABILITY PROTECTION

Most real estate activity involves some risk taking. If you are buying and improving properties for resale, you will be using contractors and other parties to help with the improvements. There will be contracts signed and potential for accidents and disputes that arise out of the business activity. If you are a landlord, there is significant risk as you will have a tenant- someone living on your property.

When you take into account the fact that your business is also holding property that is of potentially significant value , there is a lot to lose if a dispute or accident occurs or a lawsuit is filed.

Because of the risk profile that comes with real estate investments, it is imperative that the real estate and the business be operated through an asset protection entity. There are two main choices- the limited liabilitycompany and the corporation.

Both the LLC and the corporation offer the same level of personal liability protection. However, the limited liability company is more simple to run and easier and cheaper to maintain.

TAXATION

What you pay in taxes makes a real difference to the bottom line of any business. Accordingly, you will want to minimize taxes and any potential for paying more to the government as much as possible.
The real estate LLC is the dominant winner versus the corporation when it comes to taxes. With the corporation, profits from any business are taxed twice. If you sell a piece of real property, the corporation must pay taxes on the gain. Then, in order for you to reap the benefits of the profits, the corporation will distribute cash as dividends and then you personally will need to pay taxes again on any dividends you receive. When you are selling real estate, this double tax can be significant.

Even if you are primarily renting and receiving rental income, the same double tax would apply to your profits.

There are also better tax rules that apply to a real estate LLC when property is traded in for other property or converted into other uses (like personal use). Trades or property conversions made by a corporation will generally trigger tax consequences. If done through an LLC, there is an opportunity to avoid or delay the tax obligation.

SUMMARY

Because of both the liability and tax consequences and the fact that business owners and investors can run and manage a limited liability company with very little formalities and paperwork, the real estate LLC is the best property and business vehicle for holding real property such as land, houses and buildings and for conducting rehabs, improvements, development and rental activity.

As a result, it can be used for small business, real estate, holding and managing any property, family and estate planning, and joint ventures. One can be really simple such as for a single owner small business or an LLC can be used to handle very large and complex activities. For example, Fidelity Investments is an LLC which is owned by many owners and manages billions of dollars of assets.

This Article covers the basic attributes of this amazing legal vehicle.

CREATED BY LAW ONLY

A Limited Liability Company is a separate and distinct legal person that is created at the state level. It is only formed once a state has acknowledged its existence.

And, in order for a state to establish one, there must be a document filing made by an organizer. The filing is usually called the Articles of Organization and it must strictly comply with the requirements of a state. Each state has its own set of requirements and disclosures and fees.

PERSONAL LIABILITY PROTECTION

Once formed, an LLC provides its owners with legally endorsed personal limited liability protection from the entity’s debts and obligations. This feature is similar to the corporation.

If you are worried about personal exposure to law suits arising from your business, you should form a limited liability company. For example, you open a store-front business that deals with the public directly, you may worry that the commercial liability insurance you have might not fully protect your personal assets from potential slip-and-fall lawsuits or even claims by suppliers for unpaid bills. Running your business as a Limited Liability Company will give some protection against and other claims against your business.

PASS THROUGH TAXATION

If the entity is owned by just one member, then there is no added tax complexity. The income generated by the LLC is passed through to the single owner and reported on his or her personal return. Even if it is owned by multiple members, profits and losses are normally passed through the owners as if it were a partnership. But unlike a general partnership, on owners are subject to personal liability because of ownership.

This tax benefit is a significant one. The corporation, another alternative, offers the same personal asset protection but is subject to what is known as double taxation. While there is an option for elect for a corporation to be taxed as a pass through (single layer), there are quite a few requirements and restrictions. With the LLC, your entity will automatically qualify for the best tax treatment.

SIMPLE TO MANAGE AND OPERATE

Another great feature is that you can tailor the management and ownership structure of a limited liability company to suit your needs. There are very little legal mandates and this makes it easier for anyone to use one to meet their specific purposes.

This Article explains exactly what you need to know to ensure that you have the right person or entity serving as the registered agent for your company.

CLICK HERE FOR LLC REGISTERED AGENT SERVICES INFORMATION

WHAT IS A REGISTERED AGENT

This role is pretty simple. It is a person or legal entity that must be available at a designated address to accept legal papers or any official documents sent to the LLC. The registered agent must have a permanent physical address located within the state where the limited liability company has been formed.

The agent is merely an administrative appointment with the limited role of accepting deliveries made to the limited liability company and forwarding the documents, packages, papers to the last known business address of the business.

The person or business serving in this role has no duties to advise or consult the LLC and does not even have to open the packages received. But because any delivery made to a registered agent will usually be important documents, it is important that every company appoint a reputable and reliable service to serve this role.

WHY IS ONE NECESSARY?
The LLC, just like the corporation, is a fictitious being which means that it only exists because the law says so. It does not have its own physical being and presence the way a natural person has a body.
Because of this, there can be confusion by other parties or the public generally as to how to officially communicate with the company. This becomes really important when a state agency or another party needs to serve legal papers or official notices to the business.

WHO CAN SERVE AS A REGISTERED AGENT
Each state varies when it comes to determining who is qualified to serve as a registered agent for a legal entity registered in the state. For most states, there is a requirement of a permanent physical address located within the state. The person or entity should be present at such address during business hours to be able to accept any deliveries made.
Some states impose additional requirements such as mandating that the designee also be a member or manager of the company, a lawyer licensed in the state, and/or a legal entity that is properly registered and authorized to do business in the state.

CHOOSING A REGISTERED AGENT PROVIDER
If an owner of an LLC has a permanent address within the state and does not mind disclosing it on the public corporate records, he or she can serve as the registered agent of a limited liability company.
However, the better decision is to retain the services of a professional and credible national provider of RA services. By doing so, you can have more peace of mind that there will always be a person present to accept legal papers on your behalf of your business and notify you promptly of any activity. Some services also offer additional valuable services such as notifications about state filing requirements and online tools for ensuring your legal entity always remains in compliance.

When choosing an LLC registered agent provider, insist upon using a reputable and national provider.  Do not trust just any company to serve in this role because this agent is going to be the officially appointed person or entity for receiving important legal papers on behalf of your limited liability company.

CLICK HERE FOR LLC REGISTERED AGENT SERVICES INFORMATION

FIND THE RIGHT LIMITED LIABILITY CORPORATION FORM

First you need to determine if you are going to create a limited liability company or a corporation for your business entity. Each state has a different form for each of those types. Second, within each type, you can form a regular legal entity or a professional entity .

Professional limited liability corporations are limited to those running a professional licensed business such as a law firm, medical practice, engineering, accountant or architect business.
In the corporation arena, there are also nonprofit corporations and each state usually has a specific form for these kind of organizations. Often, they are considered non-stock corporations.

MAKE SURE YOU GET THE LATEST FORMS

Each state reviews their business organizations laws and procedures every year and sometimes this review generated new forms for new legal entities. Be sure you are reviewing the latest and most recent documents put out by the state.

CALL THE STATE AGENCY IN ADDITION TO REVIEWING DOCUMENT INSTRUCTIONS

It is always a good idea to call the state agency that is responsible for processing new legal entity formations. This is because any states imposed more informal processes and rules and it is a good idea to know about them prior to submitting an official incorporation filing.

For example, many states have peculiar rules when it comes to determining if a name will be accepted for a new business. Limited liability corporation form instructions will not go into this much detail.
Another issue that is worth confirming over the phone is how the state accepts payment and what the options are for expedited filings. Many times a new business owners needs their company formed fast so they can start working on their business.

Some states can have regular processing times as long as two months. But those states will offer expedited filing options for additional fees. In some cases, for as little as fifty to a hundred dollars, you can get your filing completed in a few days.

WHERE TO FIND FORMS

Most states make their forms available online through the state agency that regulates business organizations. Some states require that you call in and request them and they will either email or mail them to you. It is always a good idea to peruse through the set up provisions of the official statutes in a state as well.

Privacy Is Paramount

Just as with corporations, Delaware continues to be a state that protects the most private information when it comes to a limited liability company. It requires only minimal basic information to be disclosed on the public records.

Experienced and Business Friendly State Agency

The Delaware Division of Corporations is one of the most well organized and efficient state agencies.  They have a team of trained specialists who know everything about legal entity formations and incorporations.  They pride themselves in offering the most business and consumer friendly help available and they offer many more options when it comes to filings than any other state.  Delaware is one of the few states that will accept filings via facsimile which can speed up the process of Delaware LLC formation tremendously.

Delaware Registered Agents

Just as with other states, Delaware does require that a Delaware limited liability company have an officially appointed and qualified registered agent and registered office in the state.  Because Delaware has been the number one state for incorporations and corporations have the same requirements, there is a network of qualified registered agent companies in Delaware that offer top rate service at extremely affordable rates.

Delaware Certificate of Formation

In order to form an Delaware LLC, an official document called the Certificate of Formation must be filed with the State. It must include the name of the company, the name and address of the registered agent, and can include any other matters that a company chooses to include.  Many business will include indemnification and limitation of liability provisions just to ensure that their owners and managers receive the utmost protection available.

More Elaborate Limited Liability Company Law

Because this State has so much experience in governance matters and has probably dealt with almost any legal entity issue you can imagine (through its corporations laws), Delaware passed The Delaware Limited Liability Company Act which has more in depth provisions regarding the management and ownership of an LLC. This statute includes guidance for not only the major matters (such as formation, members, managers, and dissolution) but other topics such as finance, distributions, member and manager resignation, series LLC matters, conversions and derivative actions.

Of course, Delaware honors the one of the biggest benefits of limited liability company entities generally- that of flexibility.  It allows an LLC a lot of flexibility when it comes to setting up a management, ownership and operational structure that makes the most sense for each specific business.

SUMMARY

When it comes to the limited liability company, the great majority of them are formed in the home state of where the business will be primarily conducted.  However, in some situations, it makes more sense to form the legal entity in a state which has favorable and proven LLC laws that will support the business as it grows and evolves.  The State of Delaware has proven to be the best state for such situations because of its established laws, strong and fast courts, the formidable Delaware Secretary of State, and the strong network of services that have supported Delaware legal entity matters for over a century.

While each state varies, most steps are as follows:

ONE: Give your business LLC a name.  The business name should comply with the states rules and regulations.  It as well should not be similar to another of an already existing company.  Also, most states have required designations that must be at the end of the name (e.g., LLC).

TWO: Ensure that all the paperwork is completed and prepared in accordance with all state requirements.  The filing document is typically called the Articles of Organization but some states use different terminology.  It is a good idea to check not only the instructions provided by state forms but also the latest statutory language to ensure you meet all requirements.   You will also have to pay a filing fee when submitting your article of organization.   And, every state requires a registered agent and office within the state of formation.  Check your state’s registered agent requirements.

THREE: Once formed, an LLC should adopt a written LLC operating agreement.  This document evidences ownership of the business and also puts in place a management and operational structure for how the LLC conducts business and makes decisions.

FOUR: In a few states, there is a publication or written notice requirement.  This process usually involces obtaining a and publishing in a stated newspaper the existence of your LLC.  After a set period of weeks, the LLC will need to submit an affidavit or other confirmation to the LLC filing office of having met this requirement.

FIVE:  After the state issues a certificate evidencing the formation of the LLC, the legal entity is technically formed and in existence.  However, you should research and determine what other permits and licenses (tax registration certificate) are required to operate your business.

When learning how to form an LLC, the key is in the details and processes.  If you want to be sure your LLC is formed properly, you can hire an experienced lawyer to assist you or you can retain the services of an experienced document service company- there are several reputable ones that special in LLC formation services.

The registration of an LLC is not a very tasking activity. You do need to know that  registration of LLCs are governed by the rules and regulations of each state. Every state has a specific department who handles all the fiilgns and regulations of legal entities in the state.  During registration, a document filing is required and a filing fee has to be paid which differs in amount from one state to another.  There are also state specific disclosure requirements and every limited liability company must have a registered agent appointed in the state.

You can choose to form your LLC in any state; however, you must register that LLC in every state where it is conducting regular business.  For most small businesses, it makes the most sense to choose the home state as the main formation state as it can save you time,money and reduce reporting requirements each year.

If a business is going to conduct business in other states, it must register in those additional states.  This is known as a foreign qualification registration.  The process is similar to an organization filing in that there is a document filing, a required fee, a registered agent appointment, and likely some ongoing maintenance requirements.

Due to the lawsuit and liability epidemic in this country, it is never a good idea to move forward without the personal liability protection afforded by the limited liability company.  Given the low costs to form an LLC and maintain it, the benefit of asset protection plus the other advantages of using an LLC greatly outweigh the costs.

If you are going to run a business, you will be required to interact with other people, other companies, the government, and others.  Every time your business has a transaction or even just a connection with a third party, there is a risk of a problem occurring either right then (such as when a customer falls on your property) or way into the future (such as being sued over a dispute in a long term supplier contract).

Now, when you form a business LLC, the protection is not aboslute and so other precautions such as having smart contracts and purchasing insurance is also necesary.  But it does offer a base layer of protection that is just not there if you run a business as a sole proprietorship.

Don’t think that waiting until the business takes off is the right time for a limited liability company.  This is the worse thing you could do.  You see, when a company starts to make money, it becomes a much bigger target for lawsuits.  And, a lawsuit can relate to any business activity in the past.  So, someone can sue you for something that took place when the business was just started and making no money, but yet sue and ask for lots of money at the time it has become successful.

Be smart and form a business LLC as soon as possible after you decide to start a new venture.  Make sure you meet all the LLC formation requirements of your state and you properly form and maintain your business entity at all times.

Another reason for the popularity of the Arizona LLC is management and operational flexibility.  There are two main management structures- member managed and manager managed.  In addition to the top layer of management, a limited liability company in AZ can also hire non-member employees and compensation them.

However, it is very important to assuring you obtain personal liability protection, that you form and process your LLC formation prior to engaging in any major business activity.

The time it takes to register an LLC varies with each state.  Regular filings can vary from as short as one business day to as long as four to six weeks.  Luckily, most states also offer an expedited filing option.  If you elect to expedite your LLC registration, in most cases you are looking at one business day.  In busy legal entity states such as Delaware, they even have expedited options which will cause the formation in as short as a few hours.

Of course, with any expedited option, you are going to have to pay more in filing fees.  Usually, you will pay twice as much and in some cases, the fees get extremely expensive for a same day filing.

Given that most new businesses are cash strapped, a smart entrepreneur will ensure that a new LLC is registered and all other legal requirements are obtained prior to conducting any business.

As soon as you are committed to starting a new business, make sure you get the process to register an LLC started as soon as possible.  This will not only save you time, money and stress, but it will also provide longer protection for you as a business owner.

Technically, the limited liability company is an unincorporated entity so it is not a corporation at all.  It is its own entity that has some of the same similarities as a corporation but many differences.  On the other hand a corporation is not typically called a limited liability corporation even though the major benefit of such an entity is limited liability.

If you are seeking personal liability protection from business related obligations, then both types of vehicles provide this protection for its owners.  The corporation has been around for almost a century and every court in the nation has confirmed this.  When the limited liability company (also known as the LLC) came into existence, many businesses were afraid to rely on the legally stated protection because such liability shield had not been tested in the courts.

However, in just 3 decades since its existence, it is now commonly accepted that the LLC offers the same protection as a corporation.

What is this protection?

The legal entity protection we are talking about prevents vicarious liability.  If you ran a business as a sole proprietorship (meaning you did not make use of any legal entity), then you are personally responsible and liable for any business related activity.  The LLC and corporation provide a shield from this personal liability that you would otherwise have just by being an owner of a business.

However, the protection is not absolute.  You cannot be negligent or fraudulent or conduct criminal activity and be protected.  You are still required to act lawfully regardless of whether you are acting in the capacity of your business or in your personal affairs.  The LLC Expert website contains more details about how this works and they publish a popular LLC protection eBook that explains LLC protection in detail and provides six steps to ensure the most protection in your business affairs.

LLC means a limited liability company. If a person is interested to start or open a limited liability company he needs to go through some basic research. A person may follow the following steps that may guide him or her to start a limited liability company.

• A good business idea: To give your business a kick start you really need to have to choose or even create a business idea that you think will be suitable. This is a very necessary step however many people who want to make their future in business do not have any clue about what business they do want to start. For any budding entrepreneur there are many open options such as to buy a franchisee or to take over in existing business. They can even get started with the new idea or look for them to start a new business and so once you have decided the business of your wish them the actual work begins.
• An elaborated Business plan: When your business idea is in your hand you can start up with it and create a business plan. Creating a good business plan is very important because this will prove to be a very important factor for the people or institutions that are financing your business. The financers can be any of the friends and family or even the investors or the banks that provide loan on new business. While seeking finance from the investors or the banks make sure that they understand your concept of the business properly.
• To generate finance: To generate finance you must contact every possible person or company or firm that may help you in generating a suitable amount of money to start an LLC business. Every small business has three finance generating options: family or friends, the individual investors or bank loans. Usually if a person approaches family or friends they demand for the ownership rights in the business. If a person approaches the bank or the investors for a loan to start his or her business they will charge interest on whatever amount they are providing. These interests on loans can act as an additional expense and can also erode your personal business profits.
• To get started: after you have acquired a suitable amount of finance you may start working on implementing the business plan. But before doing so you must consider all the legal issues that may concern your business. Once you have cleared all these issues you can get started with the actual business plan and can implement it in your own way.

The above given procedure may seem to be very complicated but if a person applies them in a proper and planned way it may prove to be very useful to help to start an LLC business

What is a limited liability company? It is the ideal legal entity and planning vehicle which also offers personal liability protection. Here are some specific features:

Limited Liability Protection

First and foremost, you get personal liability protection. This is the same feature of incorporation and every court has recognized that owners of an LLC are not personally liable for the debts and obligations of the business merely because they are owners.

Before, the only way to get this was to incorporate. The most common business structure used to be the sole proprietorship where there was no liability protection at all. Now you can get this without having to meet the more onerous incorporation requirements.

Simple Operations Allowed

The LLC has none of the more complex governance, reporting and meeting requirements of corporations. Because of this, a sole proprietor business or a partnership business can continue to run its operations and management as it sees fit without having to fit into a legally mandated structure.

You can have an extremely simple set of rules similar to running a business without a legal entity or you can have as complex a business and ownership structure as you need to accommodate your specific business situation. The LLC allows the most flexibility so businesses can create what they need and not anything more.

Easy to Understand Maintenance Requirements

With the limited liability company, the formation process is relatively straightforward. And, the annual maintenance requirements are easy to follow. While each state varies in its rules, most states (but not all) require the payment of an annual fee and some states require the filing of a simple informational statement each year.

The IRS loves the LLC

In addition, the IRS favors this entity when it comes to taxation. While it was not always the case, the Internal Revenue Service passed regulations back in the late 1990s which now allows for each limited liability company to choose its taxation structure. While there is some technicality and notice deadlines, an LLC can basically choose between a single layer of taxation (also known as pass through taxation), S corporation taxation and C corporation taxation.

The Most Common Choice of Legal Entity

The LLC has only been around for several decades but it has surpassed the corporation as the number one choice for operating a small business. Entrepreneurs choose it almost ten times as often because of the simplicity, flexibility and other advantages of this entity.
A limited liability company is one of the most effective creations of government since the corporation was invented way back a century ago. Only, the LLC is even better because it incorporates all the benefits of a corporation but improves upon the disadvantages of the earlier legal entity.

The major use of one of these is to run a business that has between one and as many owners as your business needs. But other uses of the LLC include holding real estate, managing jointly owned property, trusts, and estate planning.

What is a limited liability company? It is the ideal legal entity and planning vehicle which also offers personal liability protection. Here are some specific features:

Limited Liability Protection

First and foremost, you get personal liability protection. This is the same feature of incorporation and every court has recognized that owners of an LLC are not personally liable for the debts and obligations of the business merely because they are owners.

Before, the only way to get this was to incorporate. The most common business structure used to be the sole proprietorship where there was no liability protection at all. Now you can get this without having to meet the more onerous incorporation requirements.

Simple Operations Allowed

The LLC has none of the more complex governance, reporting and meeting requirements of corporations. Because of this, a sole proprietor business or a partnership business can continue to run its operations and management as it sees fit without having to fit into a legally mandated structure.

You can have an extremely simple set of rules similar to running a business without a legal entity or you can have as complex a business and ownership structure as you need to accommodate your specific business situation. The LLC allows the most flexibility so businesses can create what they need and not anything more.

Easy to Understand Maintenance Requirements

With the limited liability company, the formation process is relatively straightforward. And, the annual maintenance requirements are easy to follow. While each state varies in its rules, most states (but not all) require the payment of an annual fee and some states require the filing of a simple informational statement each year.

The IRS loves the LLC

In addition, the IRS favors this entity when it comes to taxation. While it was not always the case, the Internal Revenue Service passed regulations back in the late 1990s which now allows for each limited liability company to choose its taxation structure. While there is some technicality and notice deadlines, an LLC can basically choose between a single layer of taxation (also known as pass through taxation), S corporation taxation and C corporation taxation.

The Most Common Choice of Legal Entity

The LLC has only been around for several decades but it has surpassed the corporation as the number one choice for operating a small business. Entrepreneurs choose it almost ten times as often because of the simplicity, flexibility and other advantages of this entity.

Forming a limited liability company requires that a state LLC filing be made with the state agency responsible for regulating legal entities. One important requirement is that the proposed name for an LLC be available for use as an LLC name in that state.

When you submit an LLC filing, the state will review and make a decision on your proposed name. Generally it cannot be the same as or similar to another legal entity name registered with the state.

A DBA name filing, also known as doing business as name filing, is made at the local level. This is the county or city/municipality where the business is located.

Each locality has its own set of rules on when a name must be registered with the locality. In most cases, if the LLC is going to use the same name to promote its business as its state LLC name, a locality will not require a DBA filing. However, check with your particular locality to be sure.

If an LLC is going to use other business names in the promotion of its business, the LLC, after it is formed, should submit a DBA name filing application in its locality. An LLC may do this when it has several businesses under one LLC, several divisions or wants to associate a DBA with certain products or services.

The series LLC is a specific kind of limited liability company that can be formed in a few states in the United States.

A series LLC is an LLC that can have separate divisions to run different businesses.  Each division will be considered separate and apart from the other divisions in the LLC when it comes to asset and liability protection.

For example, a series LLC can operate a real estate landlord business under one series (division) and a real estate development business under another series (division).

If a tenant were to sue the landlord business and obtain an expensive judgment, all the assets owned and used for the development business would not be at risk to satisfy the liabilities of the other series.

In concept, the series LLC is a wonderful mechanism because it rids an entrepreneur of the need to create multiple LLCs to run multiple business ventures if that entrepreneur wants to shield liabilities of each venture from the other.

In reality, a series LLC currently has some major limitations.

UNCERTAINTY OF ENFORCEMENT IN ALL STATES

First, it is only recognized in a handful of states so it is uncertain whether the liability protections should apply if the LLC conducts business in other states which do not have a series LLC component to their LLC statute.

If each business were operated under a separate LLC, there would be no risk of separation of assets and liabilities for each business.

SERIES LLC GOVERNANCE IS COMPLEX

Also, a series LLC is organizing multiple businesses under one legal entity and this requires the drafting of a complex operating agreement and operational procedures to ensure that each business is run as if it is a separate independent entity business.

It is a lot easier to separate each business into independent limited liability company entities and as a result you have an extra precaution for keeping them separate from each other.

SUMMARY OF SERIES LLC TREND

In time, the series LLC could become a major element of every LLC entity and when it does, the uncertainty surrounding its enforcement will be addressed.

Furthermore, series LLC forms, operating and governance procedures will have evolved and be established and these will make it easier for any series LLC business to be more easily set up and maintained.

Until then, if you choose to create a series LLC, make sure you understand the requirements and limitations in your state’s laws and consult with a competent and experienced LLC lawyer who can be sure you set up the proper paperwork to structure your businesses based on your particular circumstances.

In fact, many times, a business gets too large or complex for the one member to be able to handle all the management of the business.  In such a case, he/she will want to appoint other managers and have a Board of Managers or at least hire a slate of officers to help with day to day management.

Any limited liability company, regardless of the number of owners, can choose a member managed or a manager managed governance structure.  And, even within each of those structure, the LLC can be tailored with specific operational and governance rules that are necessary for that business.

The decision and the details of a manager managed LLC is evidenced in the single member LLC operating agreement.  It is important to document the structure and for the LLC to follow the provisions set forth in that agreement.

If you are appointing an outside manager for an LLC corp, make sure that he/she understands what authority and what limitations are part of the role.  And, always retain the ability to remove a manager with or without cause.