Florida LLC » LLC

What is an LLC (Limited Liability Company)?

admin — Wed, 15 Jul 2009 22:13:46 +0000

A limited liability company (LLC) is a form of business entity that is separate and distinct from a person, like a corporation. The LLC is often described as hybrid between a corporation and a partnership (or sole proprietorship). It allows for the limited liability protection similar to that of a corporation (i.e. your risk is limited to the amount that is invested in the LLC, and personal assets beyond that are usually protected). It also allows for a more flexible setup and operating structure than a corporation while providing the pass through taxation of a partnership (if a multi-member LLC) or a sole proprietorship (if a single member LLC). One of the main advantages of an LLC over a Partnership or a Sole Proprietorship is the Limited Liability protection.

Can I Form an LLC with just one Member?

admin — Wed, 15 Jul 2009 22:13:22 +0000

There was a time when almost every state required the LLC to have two or more members, but that is no longer the case. This important change came in response to revised IRS regulations that clearly permitted single-member LLCs. As a result, in most states, if you plan to be the sole owner of a business and you wish to limit your personal liability, you can choose between forming a corporation or an LLC.

What is an Operating Agreement?

admin — Wed, 15 Jul 2009 22:12:49 +0000

The operating agreement is akin to a partnership agreement for a General Partnership or Limited Liability Partnership (LLP). It is an internal contract amongst the members/owners of the LLC, and it lays out such things as ownership interest, member responsibilities, accounting method, adding or removing members, terms for concluding the LLC, etc. It is generally not required by a given state for forming an LLC (with the exception of New York), although it is certainly recommended. When dealing with private companies for financing issues (loans, mortgages, etc.) it may be required by that company. A customizable operating agreement is included with the LLC/Corp Kit.

Are Non-U.S. Residents Allowed to Own a Corporation or LLC?

admin — Wed, 15 Jul 2009 22:12:05 +0000

There are no citizenship or residence requirements for ownership of a C Corporation or an LLC. The S Corporation however does not allow nonresident aliens to be shareholders (owner), but any US citizen or resident alien may be a shareholder (owner). You would, of course, require an in state street address for the state to forward official legal and tax correspondence including service of process, known as the registered agent address, but neither residency nor citizenship is required for ownership of a C Corporation or an LLC.

How is an LLC Taxed?

admin — Wed, 15 Jul 2009 22:11:35 +0000

For federal income tax purposes the profits of an LLC (Limited Liability Company) “pass through” to the personal income of the members/owners. In the case of a single member LLC it is taxed the same as a sole proprietorship (i.e. typically filed on the schedule C of the owner’s personal income tax filing). In the case of a multi member member it is taxed the same as a partnership (i.e. a 1065 partnership return is filed with the IRS, with a schedule K-1 being supplied to each partner/member showing the proportional profit/loss allocated to them, with this being filed on the schedule C or E).

NOTE: These are general tax explanations and may not apply to everyone. You should confer with the appropriate accounting/tax specialists to make sure you understand your personal tax liability.

What is the Management Structure of an LLC?

admin — Wed, 15 Jul 2009 22:11:00 +0000

An LLC is typically managed by its members/owners (referred to as member-managed). In that respect an LLC is unlike a corporation, which has a much more rigid and defined management structure, including directors and officers. All owners of the LLC are typically referred to as members, and they can have control and voting interest proportional to their ownership interest, or in proportions different from their ownership interest; however the members agree.

Am I Required to Hold LLC Meetings?

admin — Wed, 15 Jul 2009 22:10:32 +0000

While meetings may frequently be necessary and proper to discuss a variety of LLC issues, they are not required by the state to have and maintain an LLC as they are with a corporation.

What is the Difference Between an LLC and a Limited Partnership?

admin — Wed, 15 Jul 2009 22:09:50 +0000

A Limited Partnership consists of at least one general partner and one limited partner. The general partner is potentially liable for all the obligations of the partnership. The limited partner has limited liability. Limited partners may jeopardize their limited liability status if they actively participate in the business of the partnership.

An LLC consists of one or more members which may be individuals, partnerships, limited partnerships, trusts, estates, associations, corporations, other limited liability companies or other business entities. The members of an LLC are afforded limited liability similar to shareholders of a Corporation and have pass-through taxes comparable to a partnership.

Does Forming an LLC (Limited Liability Company) or Corporation Require an Attorney?

admin — Wed, 15 Jul 2009 22:08:45 +0000

No, it does not. An attorney is not a legal requirement to form a Limited Liability Company. While we always recommend consulting the appropriate legal and accounting specialists, we can take care of the filings for you and save you … Continue reading →

In What State Should I Form my LLC or Corporation?

admin — Wed, 15 Jul 2009 22:07:59 +0000

Unless you plan on having a large, multi-state operation, it is generally best to form your company in the state in which it is located.

Generally speaking, most states will expect you to be registered with them if there is substantial ongoing business and/or a physical presence in that state. If you do form your company in a state other than the one in which your company is located, you may ultimately need to register your company as a foreign (out of state) company with your home state, which will subject you to all of the fees, taxes, and regulations of that state.