Top LLC Companies: Everything You Need to Know
Top LLC companies are ranked by Forbes Magazine, with over 200 firms making it into the rankings in recent years.3 min read
2. Reasons to Form an LLC
3. Advantages of Forming an LLC
4. Disadvantages of an LLC
5. Mistakes to Avoid When Forming an LLC or Corporation
Top LLC companies are ranked by Forbes Magazine, with over 200 firms making it into the rankings in recent years.
America's Largest Private Companies
These are America's largest private companies, and in 2017, they made a combined revenue of $1.57 trillion and employed 4.7 million people. Cargill and Koch Industries secured the top two places last year, with Cargill at the top spot for 10 years in a row with $109.7 billion in revenue. Albertsons, Deloitte, and PricewaterhouseCoopers round out the top five. Uber made its first appearance on the list at No. 52 along with other recognizable newcomer names like ADT and Red Lobster.
To be included on the Forbes list, companies must:
- Have revenues that exceed $2 billion
- Have too few members to file financial statements with the SEC
- Only have restricted shares, like family or employees
- Exclude foreign companies that do not pay income tax
- Be under self-ownership or owned by less than 50 percent by another private, public, or foreign company
Reasons to Form an LLC
Depending on how you form your company and how many investors and employees you plan to have, a small business can benefit from an LLC structure because it eliminates the double taxation issue found with corporations and provides some personal asset protection for members.
You should research in which state you receive the most benefits when forming an LLC. Delaware has been a popular option because of its low costs. Costs aside, it makes sense to form an LLC in the state where you primarily conduct business.
LLCs do not require a lot of maintenance like corporations do, and they make it easy to add partners or sell their interest to someone else.
Advantages of Forming an LLC
Advantages of structuring as an LLC include:
- Liability protection for members
- Flexibility in management
- Pass-through entity for tax purposes
- Flexibility in allocating income and losses
Disadvantages of an LLC
Potential disadvantages include:
- Some states charge additional fees
- You can split income, but unlike an S corporation, you may be required to pay self-employment or payroll taxes
- Some states forbid professional groups, like doctors or attorneys, from forming an LLC
- Restrictions on membership transfers
- Single-member LLCs have reduced asset protection, and some states provide none
Mistakes to Avoid When Forming an LLC or Corporation
The most common business types are corporations (S and C corporations) and LLCs. It's important to understand each of their features so you pick the option that's best for you. One of the biggest mistakes people make is assuming they are too small to need a corporation or LLC. Examples of mistakes businesses can make regarding choosing the wrong business type are:
- A freelance writer creates a C corporation and is taxed twice, resulting in significant income loss.
- Two partners create an S corporation for their consulting business, which means they have to pay tax on their respective ownership. They had wanted to allocate 80 percent/20 percent, which means they needed to form an LLC to have more flexibility.
Don't necessarily choose Delaware or Nevada to set up your business just for low filing fees and lack of state income tax, as these benefits are typically more lucrative for larger companies, not small businesses. If you have less than five shareholders, choose the state where you have the most physical presence; otherwise, you are likely to run into a number of problems.
Setting up a corporation or LLC is not the same as getting your business license. Most businesses need to set up some type of licensing, even freelancers working from home. Check with your local city municipality to find out what is required.
If someone can show you did not adequately maintain separation between personal and business assets, they can potentially “pierce the corporate veil,” exposing your personal assets. To keep this from happening, you must:
- Use your business title when signing any documents to keep from giving the impression you're acting in a personal capacity.
- Ensure no mixing of funds.
- Register a DBA name.
- Always submit your annual reports/annual statements on time as required by your particular state.
- If you operate in additional states, file for foreign qualification.
- File Articles of Amendment every time you have important changes.
Even if you follow all these requirements, you won't be protected if you are operating a business that engages in unlawful or fraudulent acts. If you break the law, you are personally liable.
If you have questions regarding top LLC companies, you can post your legal need on UpCounsel's marketplace. UpCounsel only accepts 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.