The Basics of Setting Up an LLC

 LLC or A limited liability company (LLC) is a form of enterprise that blends elements of partnership and corporate structures. LLCs do not need to be organized for profit.  And here’s the good news!  Setting up an LLC is just a breeze!  This article will teach you the basics on how you do it!

It is often incorrectly called as a "limited liability corporation," instead of the correct meaning “company.” LCC is a business entity having certain characteristics of both a corporation and a partnership or sole proprietorship, depending on how many owners there are.

LLC shares the basic characteristic of having a limited liability with a corporation; however,   it is often more flexible than a corporation, and it is well-suited for companies with a single owner.

Though it’s often not required by law, one should draft an operating agreement for your LLC that spells out the details of the business arrangement, including members’ percentage ownership, roles, rights and responsibilities. Undergoing such an agreement can help protect the LLC structure if it is challenged in court and prevents you from having to default to state operating rules.

One of the highlights of the LLC business is that you don’t have to hire a lawyer to set it up, since state requirements are usually self explanatory. But it’s a good idea to have one to read over paperwork and your operating agreement to make sure your interests are protected.

Advantages of LLC

• Limited liability, meaning the owners of the LLC, who are often called "members," are protected from some or all liability for acts and debts of the LLC depending on state laws.
• Less administrative paperwork keeping than a corporation.
• Pass-through taxation, meaning “no double taxation,” unless the LLC opts to be taxed as a corporation.
• LLCs can be set up with just one person involved
• Less risk to be "stolen" by "hungry" investors

Setting up an LLC or limited liability company is not that difficult as most people think. Here are the steps you need to take to make your LLC a legal reality.

1. Choose an available business name that complies with your state's LLC rules.
2. File formal paperwork, usually called articles of organization, and pay the filing fee.
3. Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
4. Publish a notice of your intent to form an LLC.
5. Obtain licenses and permits that may be required for your business.

Licenses and Permits

After you've completed the steps enumerated and described above, your LLC is official. But before you start your business, you need to secure the licenses and permits that all new businesses must have to operate. These may include a business license, which is sometimes also referred to as a "tax registration certificate," a federal employer identification number, a sellers' permit, or a zoning permit.

This basic information would definitely give you the hints on how to set up your own LLC.  So set up one today!

Ann Cervales, Davao City, Philippines