Limited Liability Company is an attractive new alternative available to small business owners to Incorporate. Until the concept of Limited Liability Company came into picture, businessmen had a choice of business entity that was limited to only corporations or partnerships. The gaps created by corporation and partnership has been filled by Limited Liability Company.

A Limited Liability Company is a legal form of business option that offers limited liability to its owners. It is a hybrid of a corporation and a partnership, especially suitable for smaller business setups with restricted number of owners. It combines the features of limited liability incorporate llc and pass-through taxation. Shareholders in a limited liability company are not personally responsible for the corporation's obligations. If the corporation runs into debt or losses, they lose nothing more than the value of their shares. Many form a Limited Liability Company with the aim to protect personal assets by forming and maintaining separate Limited Liability Companies to hold each separate property or business entity. In case of any arising legal conflict, only the assets owned by the respective Limited Liability Company would be subject to claims.

Many form a Series Limited Liability Company, if it is allowed under permitted laws of the respective state. Each unit of a Series Limited Liability Company is treated as an independent entity, owning individual assets, incurring separate liabilities, and having different members. The losses incurred by incorporate llc one unit do not jeopardize the assets associated with the other subsidiary units. There is no restriction on having any number of units or subsidiaries.

However, not all types of business can operate as Limited Liability Company. Banking, trust, and insurance related businesses cannot form Limited Liability Company. In some states, even professionals such as accountants, architects and doctors cannot operate their respective business as Limited Liability Company.

A Limited Liability Company can be formed in the jurisdiction other than, in which it is operating its business. In such a case, you need to file for a Foreign Qualification. Although, this decision depends upon the cost analyzing by comparing the expenses in the state of operation versus qualifying to do business as a foreign limited liability company in another state.

Although, laws and fees governing the formation Limited Liability Company vary from state to state, the process generally involves two main actions. You need to file Articles of Organization with the secretary of the state.

The Articles of Organization contains the name of the company, the location of its office, the names and addresses of owners and shareholders, and the name and address of the Registered Agent (if appointed). A registered agent is a specialized business attorney specialist hired to handle initial as well as subsequent legal papers on your behalf, and is responsible to receive notices from the state and lawsuits. The second step is defining the Operating Agreement. The Operating Agreement is an internal operating document that sets the rules for operating the company. It can be modified and updated as the business grows and changes.

As an owner, you can choose any name for your Limited Liability Company. However, the name should be chosen carefully that portrays the desired image and project the type of business.

In order to avoid any legal clashes, the name you select must not be "deceptively similar" to any existing company name, that has been previously registered in the records of your state. Additionally, the name you choose should project that your business a limited liability company, which requires the company name to be followed by some kind of indicator, "Limited Liability Company," or the abbreviation incorporate llc. Few state jurisdictions require publishing a notice in a local newspaper, declaring that a Limited Liability Company has been formed.

Most of the time, the owners or the shareholders participate equally in the management of the company. Such a system is well known as Member Management. At other times one or more owners (or even an outsider) are appointed to take the responsibility for managing the Limited Liability Company. Any kind of management structure can be adopted and based on that, regular organizational meetings are conducted.

A Limited Liability Company can have unlimited number of owners or shareholders, also known as members. The whole process and operations of a limited Liability Company is very flexible and involves less paperwork and record keeping. There is no compulsion on maintaining the minutes of the meetings, which the members of the company hold. Depending upon the type of organization structure, the profit distribution varies. Each member can be assigned separate economic benefits of distribution of profits or losses. A Limited Liability Company possesses centralized management. Moreover, a Limited Liability Company protects the owners or shareholders or members of the business, against any personal liability. The members are not personally held liable for any debts in condition of losses.

Limited Liability Company features the advantage of pass- through taxation. For tax related issues, a Limited Liability Company is not considered a separate entity from its owners. The owners pay taxes on their respective share of profits.

The element of paying double tax, that is, corporate tax as well as individual tax is non-existent.

A Limited Liability Company is dissolved in case death of any of its member or owner. The same holds good if any member or owner undergoes situation of bankruptcy. Thus a Limited Liability Company incorporate llc does not enjoy the benefit of unlimited existence. Many states charge heavy franchise tax or capital value tax on the Limited Liability Company. This franchise tax is like a business privilege tax, which the Limited Liability Company pays to the state for its existence as limited liability. The amount of the tax can depend on or combination of various factors like the companys revenue, profits, number of members or owners, or the amount of capital invested in the business in the state.

Thus a business existing as a Limited Liability Company can be profitable as well as disadvantageous depending upon specific facts that are unique to each case. It is very important to study and analyze the same considering the laws, tax rules and related fees for the specific state, before deciding to venture into a business structure like Limited Liability Company.