22 November 2022
You’ve definitely heard the term “LLC” before and may already be aware that it refers to a particular sort of organization. So let’s break it down even further…
What is an LLC?
A Limited Liability Company is known as an LLC. It’s a formal corporate structure that protects your private property from being seized in court. In essence, it separates your personal money from your business money so that your personal assets do not serve as collateral if your business fails.
Who owns an LLC?
Members of an LLC are its owners. Single-member LLCs (one owner) and multi-member LLCs are both possible (multiple owners). Members of the LLC are listed on your LLC Articles of Organization, which is the document you filed with the Secretary of State to form your LLC.
Why form an LLC?
Protecting your personal assets is the primary justification. The assets of your business and your personal assets (such as your home, bank accounts, investments, jewelry, etc.) are protected by LLCs. If, for example, your business owed a large amount of money to a creditor, that creditor would not be able to take any of the personal assets listed above.
Why create an LLC rather than a corporation?
-> LLCs are exempt from electing a board of directors
-> Profits from LLCs can be distributed in any way
-> LLCs are exempt from the requirements for board meetings and meeting minutes
-> Unlike corporations, LLCs are not subject to double taxation
Is an LLC Required to Launch a Business?
An LLC is not required to be set up to launch a business. However, one of several options for structuring a business is an LLC. Additional options include:
- Single-person business
In this case, a single person is the company’s owner. There is no exemption from personal accountability for commercial obligations for the owner.
- Partnership in general
When two or more people own a business, this is the most straightforward arrangement. The partners are not protected from being held personally responsible for business debts or actions taken by the other partners while doing business.
- Partnership limited
There are two sorts of owners in a limited partnership: general partners (who run the company, make the decisions, and are personally liable), and limited partners (who are investors who do not have the right to operate the business or make business decisions and do not have personal liability for business debts).
NEED MORE INFORMATION?
Order our guide today: How to form an LLC in Illinois
Til next time,