7. LIMITED LIABILITY COMPANY:
Limited Liability Companies (LLC) offer the limited liability of a corporation and the tax status of a partnership, without the disadvantages of an S corporation. To form an LLC, you generally need two documents; a charter and an operating agreement. A charter is a short document with basic company information, such as name, address and must be filed with the Secretary of State in your jurisdiction.
An operating agreement, is not always required, however it does outline the rights and obligations of the members, and by attorney recommendation can aid in any dispute resolution. Like a corporation, LLC’s members are not personally liable for debts of the company. Like a partnership, the income flows through the company and to the individual members, avoiding the double taxation. Unlike S corps, LLC’s may have partners that are corporations, partnerships or non-resident aliens. They are permitted to have different class of stock, and are not required to hold annual meetings or maintain a minute’s book. LLC’s may be complicated to form, so it is important to consult a licensed attorney or accountant for this service.
In an LLC, the operating agreement can outline many of the terms of the organization, specifically transferability rights. If the operating agreement is silent on the issue, a unanimous vote will be required prior to any of the owners formally transferring their ownership rights. An LLC is also permitted to continue operation, even after the withdrawal, whether voluntarily or by death, of one of its members, however, the LLC must pay the departing member the value of their interest. If an LLC decides to go public, it would lose its favorable tax status. Thus, it is crucially important to further research and decide the best corporate formation and direction of your company and consider all tax advantages prior to doing so.
With a plethora of formation options, it may be difficult to choose which is right for you. This article is meant for entertainment and information purposes only; all information is deemed reliable but not guaranteed. Please consult with a licensed professional attorney and/or accountant to correctly start and form your new business. Good Luck KASANOVA….You’re Dream is Waiting.