Creating A Limited Liability Company- Some Tips

A limited liability company can be defined as a corporation which is owned by a limited number of shareholders. The laws pertaining to creating a limited liability company are different in different states. Some general attributes of a limited liability company (commonly written as LLC) include: -

* The board of directors is generally not needed. * The transfer of shares is usually limited. * There is only a sole proof of the shares which is the notation done on the register. No certificates are used for this purpose. * The limited liability companies have to register themselves with the Office of Secretary of States Corporations Division.

There are few important points to be taken care of while creating a limited liability company. Before we proceed towards it, let us talk about some advantages of creating a limited liability company. In a LLC, there is no need for an annual meeting of all the shareholders. The board of directors face no problem regarding their loss of power. The paperwork for administrative and record maintaining purpose is very less. A LLC does not have any double taxation system until a LLC decides to be taxed just like a corporation is taxed. A limited liability company can decide on it own whether to be taxed as a single proprietor, S-corporation, or a partnership, thereby providing a good flexibility.

The method of creating a limited liability company First, get the LLC Articles of Organization of your state from the office of Secretary of State. Make sure to find out all the rules and regulations related to LLC. Next, select a good name for your business. The name must be in accordance with the rules of your state for LLC business names. Then, fill out the form of Articles of Organization. While filling the form you have to mention the names of all the members of the limited liability company you are going to set up. It is not mandatory to specify the type of ownership distribution or the structure of management. Some states would ask you to publish a general notice in the local newspaper about your wish to create a limited liability company.

Then submit the Articles of Organization form to the appropriate Secretary of State along with the described filing fee. The filing fee ranges from $40 to about $900. A word of caution here. Some states charge an annual tax along with the filing fee. Hence, make sure to investigate in this matter deeply. Now, legally the process of creating a limited liability company is complete. But, even though the legal process of creating a limited liability is complete there is another very important point remaining; it is the LLC Operating Agreement. This agreement is not needed by the state so it can be created after the completion of all legal process. If an LLC has more than one owner then the importance of this agreement becomes much more.

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