Limited Liability Company (LLC)
Congratulations on deciding to start your own business and become your own boss! I'm here to help you along the way. Let's first start by choosing the right entity. Limited Liability Company, the simplest way to protect your personal assets.
In the United States, a limited liability company is a business entity type that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation, creating the best of both worlds for business owners. LLCs have rapidly become one of the most popular business structures for new and small businesses, largely because they are considered to be simpler and more flexible than a corporation.
When you form an LLC, your business becomes its own legal entity, with separate debts and legal matters. However, LLCs are still tied to your personal taxes.
Requires fewer formalities
Unlike with a corporation, you aren't required to have a board of directors or shareholders with an LLC. You have more options in setting up your management structure.
Protects you and your assets
An LLC protects you and your personal assets—including your car, home, and bank accounts—from liability if your business is ever sued or incurs debts.
Gives you tax flexibility
With an LLC, you get to choose how you'll be taxed. By default, LLCs are taxed as pass-through entities, but you can decide to be taxed as a corporation or an S corporation.
Do I need an LLC?
An LLC, which stands for "Limited Liability Company," is a type of business structure that lets you classify your business as a separate entity from you personally. This allows you to keep your personal assets separate from your business assets, and protect them from your business' debts and liabilities.
You can open bank accounts, enter contracts, hire employees, and obtain business licenses and permits under your LLC. Most states require an annual filing and fee to keep your business in good standing.
What's the difference between an LLC and a corporation (Inc)?
Both LLCs and corporations classify your business as separate from you personally, providing personal liability protection and shielding your personal assets from your business liabilities.
Under both you can open bank accounts, enter contracts, hire employees, and obtain business licenses and permits. The key differences between the two include management structure, corporate formalities, and tax flexibility.
LLCs can be either member-managed or manager-managed, while corporations must have a board of directors, officers, and shareholders. Corporations also have more formal maintenance requirements than LLCs, requiring annual meetings with corporate minutes. And LLCs offer pass-through taxation—which means profits flow through to the owners, who get taxed on them as individuals—while corporations may be subject to double taxation at the business and personal level.
What are my tax options with an LLC?
LLCs are more flexible when it comes to taxes. Single-member LLCs can file as sole proprietorships. LLCs with multiple members can file as partnerships. Any kind of LLC can file as a corporation—either a C corporation or an S corporation.
What's the process for forming my LLC?
Think of a name for your LLC. Check with the Secretary of the State and see if the name is available.
Prepare your Articles of Organization and submit to the Secretary of State to register your LLC.
Need Help?
We can help you form your LLC in the State of North Carolina...click here