This LLC package is intended to guide and support you. If you have been considering LLC formation, this package highlights the advantages of this business entity while offering answers to some of the most frequently asked questions. Overall, an LLC is a hybrid entity that combines the pass-through taxation of a sole proprietorship or partnership with the limited liability protection of a corporation. 

What is a Limited Liability Company?

An LLC or limited liability company is a business entity which offers a number of benefits, including pass-through taxation and limited liability protection. Like corporations, an LLC is considered to be a separate entity from its owner(s). This means that owners will not be responsible for any of the company's debts or liabilities. 

In terms of taxation, LLCs are not taxed themselves. Instead, the company's owners report any income or losses on their individual tax returns. Currently, in all states except for Massachusetts, you can form a one-member LLC. However, this is expected to change in the future. 

Advantages of an LLC

When forming an LLC, owners gain many advantages. In many cases, these benefits are not available to partnerships or sole proprietorships. 

These include, but are not limited to:

  • Limited liability protection — This means that LLC owners will not be held personally responsible for any of the company's debts or liabilities. 
  • Pass-through taxation — Since LLCs do not typically pay any taxes at the business level, all of the company's profits and losses will be reported on the owners' individual tax returns. 
  • Greater flexibility — This is true in regards to operations and the allocating of profits. 
  • No restrictions on ownership — Unlike a corporation, an LLC is not limited to 100 owners. 
  • Various membership classes — LLCs can have more than one class, whereas corporations are limited to just one. 
  • Credibility — By forming an LLC, you will be viewed as a more legitimate business. 

LLC FAQs

Here are some of the most commonly asked questions to guide you through your new business venture. 

What LLC forms do I need to start this type of business?

Forming an LLC is fairly straightforward. The main documentation you need to be aware of is your articles of organization. These must be completed and then filed with the state. 

What should I name my LLC?

Choosing your business name is a critical step, which is why you should put some thought into what your company will be called. What is it that you want your name to say about your business? What image would you like your brand to represent? These are the types of questions you should ask yourself. 

You will also want to select a name that is easy to spell and remember. Once you have chosen a name (and conducted a thorough name search), know that your name must legally include "limited liability company" or an abbreviation, such as "LLC."

How is an LLC taxed?

Depending on how you have structured your business will determine how you're taxed. For example, multi-member LLCs must file an informational tax return, whereas a single-member LLC does not. Being a 'pass-through' entity, all of the company's profits and losses are reported on the owners' personal tax returns. In some cases, LLCs elect to be taxed as a corporation. 

LLC Formation Packages

The following resources will further support your curiosity and answer any questions you may have:

There many reasons why business owners decide to form an LLC. If you are looking for a flexible, easy-to-form business structure with added tax benefits, you should consider creating a limited liability company. After reading the information above, you may have specific questions based on your circumstances. If so, it is recommended that you seek professional support. Although you do not require an attorney to form an LLC, when multiple members are involved, it's best to seek a legal advice. 

If you need help understanding the full meaning of an LLC, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.