LLC Formation Parker CO

BRIEF SUMMARY AND INTRODUCTION: This article should provide you with the basics of limited liability companies and help guide your decision of company business formation. Each state’s laws differ as well as each company situation. It is advisable to seek tax and legal counsel to determine the best choice for your individual circumstance.

Until just a few years ago, the only choices of legal entity for a business were generally: “To incorporate, or not to incorporate.” However, in recent years, all 50 states have adopted limited liability company (LLC) laws, offering a very attractive new alternative that every small business, including the smallest home-based business, should now consider. In addition, every state but one has also created a somewhat similar new type of business entity, the limited liability partnership, or LLP.

What is a Limited Liability Company?

·  Owners are  members not shareholders or partners
·  The number of members are unlimited and could  be corporations,  individuals, or another   limited liability company
·  A business entity  several features of corporation and partnership structures
·  is not a corporation or a partnership
·  the correct terminology is limited liability company

Advantages of Limited Liability Company

Limited Liability: Owners of a LLC have the liability protection of a corporation.
A LLC exists as a separate entity much like a corporation. Members cannot be held personally liable for debts unless they have signed a personal guarantee.
Flexible Profit Distribution: Can select varying forms of distribution of profits
No Minutes: The LLC business structure requires fewer formalities Corporations are required to keep formal minutes, have meetings, and record resolutions.
Flow Through Taxation:  You avoid the double taxation of paying corporate tax and individual tax. All your business losses, profits, and expenses flow through the company to the individual members.

Forming a Limited Liability Company

There are two main actions:

1. Articles of Organization: You must pay the filing fees and file articles of organization with the Secretary of State.
2. Operating Agreement: Although it is not required in many states it is advisable to draft an operating agreement.  The operating agreement defines your company profit sharing, ownership, responsibilities, and ownership changes.