Limited Liability Company (LLC)
Start your LLCWhat is an LLC?
An LLC is an entity type that offers the personal liability protection of a corporation with the pass-through taxation advantages of a sole proprietorship or partnership.
An LLC is an entity type that offers the personal liability protection of a corporation with the pass-through taxation advantages of a sole proprietorship or partnership.
Forming an LLC is an easy way to protect your assets while foregoing the requirements and formalities of a corporation. If you wish to know how to start an LLC or what does LLC mean, you have come to the right place.
The Benefits of an LLC
Liability protection
Unlike a sole proprietorship or general partnership, an LLC protects your personal assets should your business get sued, which is why LLC creation can have advantages for your business.
Tax advantages
By default, LLCs do not pay corporate income taxes. Instead, profits from an LLC are passed through to the owners directly, thereby reducing tax liability in most cases. When considering whether to start LLC, you should keep in mind the tax advantages.
Business credibility
When your business name has the designation “LLC” at the end, it lets customers and partners know you are a credible business. It shows that you are a registered entity approved by the Secretary of State to transact business.
Flexibility
An LLC can have one or more owners and can be managed by its owners or an appointed manager. This flexibility helps structure your company to meet your business needs.
Simplicity
Unlike a corporation, an LLC offers simplified maintenance requirements. You receive liability protection without the need for annual meetings, boards of directors, or officers, making an LLC business easier to run.
Tax planning options
LLCs can elect to be taxed as an S-Corp, C-Corp, sole proprietorship, or partnership. This provides tremendous flexibility in tax planning and optimization which makes forming an LLC beneficial for many business owners.
Business loans
Once setting up an LLC is finished, you can start to build your business credit history. This will help you access business loans and credit that will help your company grow.
LLC use cases
Milosh started an e-commerce business in California
The favorable tax options and easy upkeep of an LLC make it an attractive option for anyone wishing to operate an e-commerce business in the US, like Milosh. Unlike corporations, LLCs do not have extensive formal requirements, such as annual shareholder meetings and boards of directors. As such, LLCs simplify company management and provide additional time to devote to your business.
Blair started a fashion brand in New York
An LLC offers the right combination of personal liability protection, pass through taxation, and business credibility desired by most startup businesses. Blair, like other small business owners, used her LLC to gain access to loans to scale her fashion business.
Ife started an SaaS company in Texas
Ife, like many service-based business owners, needed liability protection to shield himself from claims against the business by disgruntled customers. His LLC not only provided him with liability protection but also the flexibility to adapt his tax planning strategy to his company’s needs.
Who should NOT use LLC
Companies seeking outside investment
If you plan to raise capital soon after forming your company, an LLC is not the right entity type for you. Investors, generally, do not favor the pass-through taxation and flexible structure of LLCs.
Companies with many owners
The flexible management structure and minimal formal requirements of LLCs are well suited for closely-held companies and other companies with few owners. Companies with many shareholders are better served by the formal requirements of a corporation.
Your company will be in good company
Start your companyHow much does it cost?
$40-$500
The filing fees for LLC creation vary from state to state, ranging from $40 to $500.
How long does it take?
1 to 21 days.
To start LLC takes between 1 to 21 days. If you have a valid US social security number the process should not take more than a week in most states. The IRS takes longer to issue EINs to companies owned by foreigners, which may add additional time.
