The Legal Documents Needed On how to Form an LLC
Learning how to form an LLC doesn’t have to be a torture. The most popular form of a company was made to be very easy to create. An LLC or a limited liabilities company is a unique business entity that has the features of a traditional company and a sole or partner proprietorship.
The LLC has the number of members that a traditional corporation can handle. So an LLC can be composed of 3 or more members. The LLC also has the benefits of a sole proprietorship or partnership which is pass through taxation. In a pass through taxation, the profit is only taxed once unlike double taxation of a traditional company. Still, forming an LLC needs the proper legal documents to be filed.
In order to form an LLC, you need the Articles of Organization. The Articles of Organization is different in every state. You need to get an updated form so that you won’t run into problems in the future. The Article will give you the State requirements of an LLC. If you managed to fill it out incorrectly, some States will still recognize your company as an LLC.
The next legal document is the Operating Agreement. This document is like the backbone of an LLC. It declares the structure of your company as an LLC. First, it lists down the agreement between the State and the company. The company should only functions an LLC. Next is the agreement between the members and the company. Usually this document will list down the duties, obligations and rights of the members.
The Operating Agreement is also useful in declaring the company as a separate entity from the members. When someone sues the company, the Operating Agreement will shield the members from the lawsuit to an extent. Because the company is a separate entity, bankruptcies will not affect the member.
As long as you learn how to incorporate the many features of an LLC, your company can grow and flourish. Still, the LLC can be considered a stepping stone. Once it is big enough you can move into the big leagues which are the realm of traditional companies.
The LLC has the number of members that a traditional corporation can handle. So an LLC can be composed of 3 or more members. The LLC also has the benefits of a sole proprietorship or partnership which is pass through taxation. In a pass through taxation, the profit is only taxed once unlike double taxation of a traditional company. Still, forming an LLC needs the proper legal documents to be filed.
In order to form an LLC, you need the Articles of Organization. The Articles of Organization is different in every state. You need to get an updated form so that you won’t run into problems in the future. The Article will give you the State requirements of an LLC. If you managed to fill it out incorrectly, some States will still recognize your company as an LLC.
The next legal document is the Operating Agreement. This document is like the backbone of an LLC. It declares the structure of your company as an LLC. First, it lists down the agreement between the State and the company. The company should only functions an LLC. Next is the agreement between the members and the company. Usually this document will list down the duties, obligations and rights of the members.
The Operating Agreement is also useful in declaring the company as a separate entity from the members. When someone sues the company, the Operating Agreement will shield the members from the lawsuit to an extent. Because the company is a separate entity, bankruptcies will not affect the member.
As long as you learn how to incorporate the many features of an LLC, your company can grow and flourish. Still, the LLC can be considered a stepping stone. Once it is big enough you can move into the big leagues which are the realm of traditional companies.
