When one decides to open a business, there are many terms which you come across regularly but aren’t sure what they exactly mean. And out of such things, LLC is often the leading one. Definitely, you do get the idea. That it is a type of Company, which one gets registered. But aren’t sure about the important terms, and other details which come along? Well then don’t worry. As in this post, we will be discussing them all. So let us start from the beginning.
What is an LLC?
LLC Stands for Limited Liability Company. It can be opened and owned by one or two or even more persons. And they are referred to as LLC Members. As evident from the name, Single Member LLC has one member. And Multi Member LLC has multiple members. The basic idea of forming an LLC is to create a different structure for the business. For example, making a business stand for itself, and establishing it as one separate identity. So in case, a person sues an LLC Company, the owner’s personal assets cannot be affected by that lawsuit. As the owners only have a limited liability towards the company. Below is a short video which will help you get your basics right.
When does One Need to Form LLC
So now that you understand, what an LLC really is. The next big question which comes to your mind will be, do you really need it? As said above if you are going to register a company, LLC can offer many advantages over a Corporation, General Partnership or Proprietorship. There are many advantages, and it can protect your personal assets from coming under fire if things go south. Which the other types of Business Structures won’t be able to do. Also, an LLC Firm is easier to maintain and register as well. It will also save you from double taxation. Have a look at the chart below from howtostartanllc.com for more insight.
There are many more advantages of forming an LLC, but we cannot discuss them in full detail here in this post. So we will leave it to another post, where we will be having look at all of them in minute detail.
Types of LLCs:
While the basic idea of forming an LLC is the same. But there are some different types of LLC Companies you can form or register. The basic working is the same, but there are some special types of LLC’s for specific purposes. Let us have a look at them briefly.
As the name suggests a Domestic LLC Operates only in the state or the Region in which it was registered. So for instance, if you get an LLC registered in California, and it operates in California only. It shall be referred to as a Domestic LLC. These types are the most common types of LLCs which you will find out there.
Now exactly like a domestic LLC, a foreign LLC is the one which operates in another state. For instance the LLC you registered in California, also operates in New York. Then to do that, you will have to register your LLC as a foreign LLC in the New York as well for it to be able to function there.
Professional LLCs are the ones which cater to a specific service, a professional one. Like a Consultation, or Medical Services etc. To be able to register a professional LLC, the members of the LLC should hold the required licenses for them to operate in the respective states. This type of an LLC is somewhat complex and has some points to consider before you go for it. So it is always advised that you seek legal advice before you go for this type of option.
In this type of an LLC, there is a parent LLC. Under which you register Child LLCs. Again the parent will only have a limited liability towards the child LLCs. And the Child LLC will also be protected from the liabilities of other business sisters or parents as well. This type of a structure is quite complex, and at the moment every state in the United States does not support this. There are only about 17 states under which you can adopt this kind of an approach to register your multiple businesses.
Where and How to Form LLC
Now you can get started with the paperwork right away and begin to register your LLC on your own. But many time sit is advised that you get it registered from an agent. And nowadays there are plenty of online services which will be helping you get your LLC registers super easily.
All you will need is to provide them with the tiny bit of details and then go back and focus on your business. Often requires the basic details like the name, the state you want them to get registered. And what type of industry or service your registered company will be providing. We have covered some of the services for you, where you can get your LLC registered. Though picking the right service can be a bit tricky here. As there so many different services which can get the job done, and with the different pricing and the features they provide.
So this was, in brief, to explain you to the idea about LLCs. What they are, and why you might get them registered over other types of filings. I hope this post helped you get a basic idea about LLCs, what they are, Where you can get one registered, and why you might need them too. If you think we missed out on any of the details, do not hesitate to join in the comments below, and we will happy to add and help you get a better understanding.