USA Limited Liability Company Registration $39.99
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A limited liability company (denoted by L.L.C. or LLC) in the law of many of the United States is a legal form of business company offering limited liability to its owners. It is similar to a corporation, and is often a more flexible form of ownership, especially suitable for smaller companies with a limited number of owners. Unlike a regular corporation, a limited liability company with one member may be treated as a disregarded entity, so the member is often singled-out as a person performing the actions of the LLC.
A limited liability company with multiple members may choose, generally at the time that the new entity applies for a US federal taxpayer ID number, to be treated for U.S. federal taxation purposes as a partnership, as a C corporation, or as an S corporation. An LLC can elect to be either "member managed" or "manager managed."
Advantages
* No requirement of an annual general meeting for shareholders.
* No loss of power to a board of directors.
* Much less administrative paperwork and recordkeeping than a corporation.
* Pass-through taxation (i.e., no double taxation), unless the LLC elects
to be taxed as a corporation.
* Limited liability, meaning that the owners of the LLC, called "members," are
protected from liability for acts and debts of the LLC.
* Using default tax classification, profits are taxed personally at the
member level, not at the LLC level.
* Check-the-box taxation. An LLC can elect to be taxed as a sole proprietor,
partnership, S corporation or C corporation, providing much flexibility.
* LLCs in some states can be set up with just one natural person involved.
* Membership interests of LLCs can be assigned, and the economic benefits
of those interests can be separated and assigned, providing the assignee
with the economic benefits of distributions of profits/losses (like a
partnership), without transferring the title to the membership interest
(i.e., see Virginia and Delaware LLC Acts).
* LLCs in most states are treated as entities separate from their members,
whereas in other jurisdictions case law has developed deciding LLCs are
not considered to have separate juridical standing from their members
(See recent D.C. decisions).
* Unless the LLC has chosen to be taxed as a corporation, income of the
LLC generally retains its character, for instance as capital gains or
as foreign sourced income, in the hands of the members.
Disadvantages
* Many states, including Alabama, California, Kentucky, New Jersey,
New York, Pennsylvania, Tennessee, and Texas, levy a franchise tax or
capital values tax on LLCs. (Beginning in 2007, Texas has replaced its
franchise tax with a "margin tax".) In essence, this franchise
or business privilege tax is the "fee" the LLC pays the state
for the benefit of limited liability. The franchise tax can be an amount
based on revenue, an amount based on profits, or an amount based on the
number of owners or the amount of capital employed in the state, or some
combination of those factors, or simply a flat fee, as in Delaware. Effective
in Texas for 2007 the franchise tax is replaced with the Texas Business
Margin Tax. This is paid as: tax payable = revenues minus some expenses
with an apportionment factor. In most states, however, the fee is nominal
and only a handful charge a tax comparable to the tax imposed on corporations.
* It may be more difficult to raise financial capital for an LLC as investors
may be more comfortable investing funds in the better-understood corporate
form with a view toward an eventual IPO. One possible solution may be
to form a new corporation and merge into it, dissolving the LLC and converting
over to a corporation.
* The LLC form of organization is relatively new, and as such, some states
do not fully treat LLCs in the same manner as corporations for liability
purposes, instead treating them more as a disregarded entity, meaning
an individual operating a business as an LLC may in such a case be treated
as operating it as a sole proprietorship, or a group operating as an LLC
may be treated as a general partnership, which defeats the purpose of
establishing an LLC in the first place, to have limited liability (a sole
proprietor has unlimited liability for the business; in the case of a
partnership, the partners have joint and several liability, meaning any
and all of the partners can be held liable for the business' debts no
matter how small their investment or percentage of ownership is).[citation
needed]
* Although there is no public requirement for an operating agreement,
members who operate without one may run into problems.
* Some people, such as new business people, may not be familiar with the
governance of LLCs. Unlike corporations, they are not required to have
a board of directors or officers.
* The principals of LLCs use many different titles -- e.g., member, manager,
managing member, managing director, chief executive officer, president,
partner. As such, it can be difficult to determine who actually has the
authority to enter into a contract on the LLC's behalf.
The process of register your Limited Liability Company in the USA, has three main elements:
First is the Name Search. A State Business Name Search Report should be obtained. This is a search through the Corporations Division Office records that will determine whether another business is using the name you have selected and where that business is located.
Second Filling of Articles of Organization is completed with the Corporations Division Office.
The third element is the fee to register your Limited Liability Comany and expedition of your certificate of registration.