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Everything you need to form your own LLC!

Limited liability companies provide the most flexible way of doing business: You get both the tax benefits of a partnership, and the personal protection from business debts provided to corporations.

Form Your Own Limited Liability Company provides you with the step-by-step instructions and forms you need to form an LLC in your state, without the expense of hiring a lawyer. This bestseller covers how to:

choose an LLC name

prepare and file articles of organization

decide on the best management structure

create an operating agreement

take care of ongoing legal and tax paperwork

The 5th edition has been carefully revised and updated to reflect the latest federal regulations, as well as the most current laws of all 50 states. All the forms you need are included under Appendix B of the ebook.

*The CD-ROM is not included with the digital version of this book.

Anthony Mancuso

Anthony Mancuso

In this chapter, we'll cover the nuts and bolts of the limited liability company, or "LLC": the most common questions, the primary benefits, which businesses should choose LLC status, and what other types of business entities there are. We'll delve into the specific legal and tax characteristics of LLCs in the next two chapters.

If you are familiar with LLCs. If you have followed the development of the LLC over the last few years and know its general legal and tax characteristics (or you simply want to look at the specifics of forming an LLC right now), you can skip the introductory material in this and the following two chapters. Move right ahead to Chapter 4, where you'll learn how to prepare LLC articles of organization.
Top Ten Questions About LLCs
1. What is an LLC?

An LLC is a business structure that gives its owners corporate-style limited liability, while at the same time allowing partnership-style taxation.

* Like owners of a corporation, LLC owners are protected from personal liability for business debts and claims -- a feature known as "limited liability." This means that if the business owes money or faces a lawsuit, the assets of the business itself are at risk but usually not the personal assets of the LLC owners, such as their houses or cars.
* Like owners of partnerships or sole proprietorships, LLC owners report their share of the business profits or losses on their personal income tax returns. The LLC itself is not a separate taxable entity.
Because of these attributes, the LLC fits somewhere between the partnership and the corporation (or, for one-owner businesses, the sole proprietorship and the one-person corporation).
2. How many people do I need to form an LLC?
You can form an LLC with just one owner. For reasons we'll explain later, LLCs are appropriate for businesses with no more than 35 owners and investors.
3. Who should form an LLC?
Consider forming an LLC if you are concerned about personal exposure to lawsuits arising from your business. For example, an LLC will shield your personal assets from:
* suppliers' claims for unpaid bills, and
* for businesses that deal directly with the public, slip-and-fall lawsuits that your commercial liability insurance policy may not adequately cover.

Not all businesses can operate as LLCs, however. Those in the banking, trust, and insurance industries, for example, are typically prohibited from forming LLCs. Some states (including California) prohibit licensed professionals such as architects, accountants, doctors, health care workers, lawyers, and other state-licensed practitioners from forming LLCs. Many of these professionals may benefit from forming a limited liability partnership. 4. How do I form an LLC?


In most states, the only legal requirement to form an LLC is that you file "articles of organization" with your state's LLC filing office, which is usually part of the Secretary of State's office. (Several states refer to this organizational document as a "certificate of organization" or a "certificate of formation.") A few states require an additional step: Prior to or immediately after filing your articles of organization, you must publish your intention to form an LLC, or a notice that you have formed an LLC, in a local newspaper. We'll explain how to prepare and file articles of organization in Chapter 4.

 

Everything you need to form your own LLC!

1. Overview of the LLC
Top Ten Questions About LLCs
The Benefits of LLCs
Which Businesses Benefit as LLCs?
Comparing LLCs and Other Business Forms
Business Entity Comparison Tables

2. Basic LLC Legalities
Number of Members
Paperwork Required to Set Up an LLC
Responsibility for Managing an LLC
Member and Manager Liability to Insiders and Outsiders
Are LLC Membership Interests Considered Securities?

3. Tax Aspects of Forming an LLC
Pass-Through Taxation
How LLCs Report and Pay Federal Income Taxes
LLCs and Self-Employment Taxes
State Law and the Tax Treatment of LLCs
Other LLC Formation Tax Considerations

4. How to Prepare LLC Articles of Organization
Read State Sheets and Order LLC Materials
Review and Organize Your State's LLC Information
Choose a Name for Your LLC
Check Your State's Procedures for Filing Articles
Prepare LLC Articles of Organization
Finalize and File Your Articles of Organization
What to Do After Filing Articles of Organization

5. Prepare an LLC Operating Agreement for Your Member-Managed LLC
Scope of Our Basic LLC Operating Agreements
Customizing Your LLC Operating Agreement
How to Prepare a Member-Managed LLC Operating Agreement
Distribute Copies of Your Operating Agreement

6. Prepare an LLC Operating Agreement for Managers
Choosing a Manager-Managed LLC
How to Prepare an LLC Management Operating Agreement
Distribute Copies of Your Operating Agreement

7. After Forming Your LLC
If You Converted an Existing Business to an LLC
Basic Tax Forms and Formalities
Ongoing LLC Legal Paperwork and Procedures
Other Ongoing LLC Formalities

8. Lawyers, Tax Specialists, and Legal Research
Finding the Right Tax Adviser
How to Find the Right Lawyer
How to Do Your Own Legal Research

A. Appendix A: State Sheets

B. Appendix B: Tear-Out LLC Forms
IRS Form 8832, Entity Classification Election
LLC Filing Office Contact Letter
LLC Reservation of Name Letter
Articles of Organization
LLC Articles Filing LetterOperating Agreement for Member-Managed Limited Liability Company
Limited Liability Company Management Operating Agreement
Minutes of Meeting
Certification of Authority

C. Appendix C: How to Use the CD-ROM
Installing the Form Files Onto Your Computer
Using the Word Processing Files to Create Documents
Using the IRS Form
Files Included on the Forms CD

Index
*The CD-ROM is not included with the digital version of this book.

"In typical straightforward Nolo fashion, this book explains everything from choosing a name to maintaining the LLC's legal and tax status."

 

"Good news from the IRS... you, too, can be an LLC. The advantage: profits are taxed just once, like a partnership, while personal liability is limited, like a corporation. [And now you can do it yourself with] Nolo's book on LLCs."

 

"Armed with this book entrepreneurs... can take advantage of the unique tax and legal benefits of the LLC for less than the cost of 10 minutes of their own lawyer's time."

 

Anthony Mancuso is a corporations and limited liability company expert. He graduated from Hastings College of Law in San Francisco, is a member of the California State Bar, writes books and software in the fields of corporate and LLC law, and studies advanced business taxation at Golden Gate University in San Francisco. He has also been a consultant for Silicon Valley EDA (Electronic Design Automation) companies, most recently working on a C++ open-source integrated circuit database project team. He is the author of several Nolo books on forming and operating corporations (both profit and nonprofit) and limited liability companies. His titles include Incorporate Your Business, How to Form a Nonprofit Corporation (national and California editions), Form Your Own Limited Liability Company, The Corporate Records Handbook, and LLC or Corporation?. He wrote and programmed Nolo’s LLC Maker and Incorporator Pro software programs, which generate state-by-state articles and other forms for organizing corporations and LLCs. His books and software have shown over a quarter of a million businesses and organizations how to form a corporation or LLC. He also is a licensed helicopter pilot and has performed for years as a guitarist in many musical idioms.