Should I Start a Home Based Business With and LLC?
The right form of legal business structure for your business depends on factors such as the business activity and its financial implications. Each legal form of business has risks and benefits. A sole proprietorship or a partnership is easy to form and operate. These forms require no statutory procedures to form and operate except for the permits and licenses necessary to operate business in your state. Sole proprietorship and partnership are ideal for businesses which does not involve personal risk and potential financial liabilities. The personal liability of a proprietor or partner (s) is unlimited towards business obligations or debts. If a claim or liability arises out of the business, your personal assets are in jeopardy.
Limited Liability Company or Corporation offers limited personal liability protection to its business owners. There are statutory procedures required to be complied with to form LLC or Corporation. State laws govern the formation and operation and each state may have different requirements. For forming a LLC or Corporation you have to consult the state agency handling incorporations and organizations. Usually business incorporations are handled by the Secretary of State or Corporation Commissioner’s offices. All states provide online information regarding incorporation or LLC formation and personal support over telephone or in person.
For forming a LLC in any state, the basic requirement is to file an article of organisation and pay the filing fees. You require a valid name to form LLC. Make sure that the name is not similar to another business in your state. Some states provide name availability check option and you may check on the internet also. The name as stated in the articles should end with ‘Limited Liability Company’, ‘LLC’ or another abbreviation which clearly states the limited liability status of the business. The articles of organisation must state all the critical information about the LLC members and the purpose for which it is formed. The articles should also state a person or entity as a registered agent with a local street address for process service. Some states may have more requirements for forming LLC. An LLC operating agreement is required as a part of articles by some states. Even if the operating agreement is not a legal necessity, it is advisable to have one for your LLC. It will provide your LLC a separate identity and establish the limited liability status firmly in the eyes of law. Publication of the intent to form the LLC is also a legal requirement in some states. Some states prohibit formation of LLC for business like banking, insurance or professions.
