Choosing an appropriate business structure is important for many reasons. The business structure should provide flexibility in operations and limit personal liability as well. Limited Liability Companies or LLC’s are best suited for small business operations that demand flexibility in operations. LLC’s limits the personal liability of business owners like in a Corporation but offers flexibility in management as that of a general partnership or sole proprietorship. Corporations are comparatively expensive to form and operate and the procedures and formalities in its operation are quite cumbersome. Partnership and sole proprietorship offers flexibility but the proprietors and partners have unlimited liability in the business. A proprietor or partner is wholly responsible for all business transactions and obligations and their personal assets have no protection from business defaults. LLC’s provides advantage of limited personal liability and flexibility of operations.
How to form an llc depend on the state statute where you wish to register your llc. Formalities and procedures for forming an llc and operating it may vary in each state. Usually the business registrations are dealt with by the Secretary of State or Corporations commissioner’s office. Check with your state’s agency dealing with llc registrations to get proper understanding on how to form an llc. Forming llc is not difficult and does not involve many formalities so that you have to consult a professional or a lawyer. You can do it yourself if you apply some brains and effort. The general formalities and procedures for forming llc are easy and not too complicated. All states are out to attract business to their territory and will be most helpful in registering your llc.
The basic requirement in forming an llc in most states is to file an Articles of Organisation. The document will contain all the essential information regarding your proposed business. You have to select a name for your llc which is not identical or similar to that of an existing business. All states maintain a business or corporations register which you can check to ensure that the name you selected is not already in use. The name should contain the words Limited Liability Company or an abbreviation that clearly demonstrates the limited liability status of the business. The Articles of Organisation is usually available in a pre-printed format with blanks for required information. You fill in the blanks, sign as the organizer, pay the filing fees and your llc is in business. An operating agreement is advisable even if you are a single member llc. The operating agreement will provide individuality to the llc and clearly state its limited liability status.
