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what does an LLC and now I'll see your limited liability company is popular type of business structure due to its flexibility and simplicity if you're a small business owner or entrepreneur starting an LLC is one of the best ways to establish credibility and protect your assets watch this video to get a quick overview of the main features of an LLC how an LLC protects your personal assets how LLC's are taxed the importance of an operating agreement and using a professional LLC formation service at the end we'll share some free resources to help you start your own LLC and follow your business dreams millions of new businesses are formed in America every year they are legally structured as one of several choices sole proprietorships general partnerships corporations or limited liability companies the structure chosen for a business will determine who owns the business how taxes are paid and who's liable if a lawsuit or debt arises each state has specific requirements on forming and maintaining a business structure for small business owners and entrepreneurs one of the most beneficial business structures to choose from is the LLC the limited liability company an LLC has several features that make it desirable the first is LLC's acts as a legal entity separate from its owners creating what is known as a corporate veil this protection keeps the owners personal assets secure in the event of a lawsuit or unpaid business debt the second is LLC's that pass through taxation when a corporation makes a profit net profit is taxed distributed to the owners and then taxed again as personal income and LLC's profits are not taxed thus the owners only pay tax on the revenue wants and the third is that business accounting and compliance can be complicated LLC's relative to other corporate structures streamline the formation and record-keeping burden making them easy even for single owner businesses to maintain these are the main reasons you might want to start an LLC for your business there are many other reasons as well for instance privacy which we will address later and the fact that LLC owners do not have to be US citizens or permanent residents if you want flexibility and simplicity LLC's are a great option for starting a new business Oh an LLC protects your personal assets if you operate your business as a sole proprietor a partnership and for example someone gets hurt on your premises or one of your products injures someone you can be sued as an individual and lose your personal assets your home your car etc an LLC protects the business owner by acting as a separate legal entity responsible for its own debts and lawsuits the distinction between owners and business structure is known as the corporate veil it's not enough to simply establish an LLC you'll need to preserve the corporate veil by signing documents as a representative of the company and not as an individual keeping personal and business finances separate following an operating agreement avoiding fraudulent activities and keeping up to date with annual filings you can learn more about the corporate veil at our website and research common forms of business insurance you can never completely prevent problems but to prepare for the worst and protect yourself in your business forming an LLC is a good first step while LLC's are taxed taxes are one of the most complicated parts of owning a business and the penalties are stiff if you fail to comply with the law LLC's are quite flexible on how you choose to be taxed which can be used to your benefit well the details are too much to cover in this video the most important things to know about LLC taxes are if you're a single-member LLC the IRS ignores the business structure in taxes you like at wooden individual the Alice's income is reported on your personal tax return at the end of the year if you have a multi-member LLC the LLC does not pay any income taxes and all profits are passed through to the members who then pay the IRS on their individual tax return well these are the default tax elections you can also opt for your LLC to be taxed as a corporation a C Corp or an S Corp regardless of your tax designation you'll need to file yearly with the IRS check out our federal tax guide or consult with an accountant for specific details on what forms you'll need to file as for state taxes because LLC's are typically pass-through entities individual members pay state taxes not the LLC itself however there are certain types of taxes LLC's may have to pay common forms of state tax you may have to pay include franchise tax sales tax withholding tax and unemployment insurance tax again you'll want to consult an accountant for details the importance of an operating agreement when forming an LLC the most essential document is the operating agreement an operating agreement is an internal document meaning it doesn't need to be filed with the state however it's a critical component of your LLC that outlines the essential ownership and member details of the organization the operating agreement is the foundation of your LLC a living document that gives your business credibility and helps maintain your corporate veil it will outline the management and voting rules capital contributions and distributions membership and dissolution practices and all the basic stipulations on how the companies operated we provide operating agreement templates at our site we also rate and recommend professional LLC services that can help you create a custom operating agreement whose professional corporate agents are secondary companies for hire that can help you form and maintain your LLC which we'll address next using a professional LLC formation service LLC's are formed at the state level and typically cost between 50 and 150 dollars for basic formation to officially form an LLC you'll file paperwork with your state's Secretary of State and once that's been processed you'll register for an EIN or employer identification number with the IRS your ein is like a social security number for your company and is necessary for taxes and banking you can do all this on your own to save money or you can hire a professional service for an additional fifty to one hundred and fifty dollars various providers have different packages but one service to consider is hiring a registered agent when you file your formation documents with the state they'll ask for a registered agent which is like a point of contact to receive mail and official papers an LLC's registered agent can be a member of the LLC or it can be a hired service a hired registered agents of great convenience they'll help you with getting your reports filed on time will keep your business mail separate and will be available at all regular business hours to accept official mail and legal papers on your LLC's behalf final an important additional benefit of using a services privacy a professional service will provide a level of privacy by withholding your personal name and home address from the LLC's contact information there are many reasons you might not want your personal information easily accessible and associated with your busines
Thanks for your comment Eusebia Smoot, have a nice day.
- Leo Gillmore, Staff Member
in today's video i'm going to talk to you about when you should form and register an llc for your business ventures so you probably clicked on this video because you want to learn a little bit more about business specifically you want to learn when you should form and register an llc for your business ventures hi my name is andrew i'm an attorney from the malai law firm where we help entrepreneurs just like you start their businesses without dealing with the complicated legal forms we are the highest rated business law firm and as i'm speaking to you we currently have over 2153 five-star google reviews so allow me to talk to all of you about what is in llc also known as a limited liability company one of the major reasons why business entrepreneurs choose to register an llc for their business ventures is because an llc provides the same type of shield from personal liability as a corporation but it also provides a tax flexibility similar to that of a partnership i like to see it as an llc is almost a type of hybrid between a corporation and a partnership in fact some people would say that it's right in between it's the middle ground in fact all 50 states here in the united states will recognize an llc as a valid and as a authoritative business structure one of the major reasons why business entrepreneurs are registering llcs is because it provides an extra barrier of protection for your personal assets while providing you with the simplicity of taxation in fact llcs are the most popular business entity for small and mid-sized business owners this basically means that they are a lot easier to manage and operate in comparison to an actual corporation and what i mean by this is an llc has less formalities one major benefit of registering an llc as opposed to a corporation is the flexibility of the number of owners that can be a part of the ownership interest and the management of an llc there are certain considerations that you're going to want to be mindful of when registering in llc some of these requirements and some of the considerations that you're going to want to keep in mind are the costs as well as the filing requirement now a basic understanding of an llc is that llc owners are called members there can be one member of an llc which means that there would be one owner or there could be multiple members which would mean that there would be multiple owners of the llc the amazing aspect of having an llc is that an owner does not have to be an individual or a human being an owner can be another corporation or another llc that is amazing benefit the llc's provide is that you have that sort of flexibility to choose and decide the exact type of business structure you want to create the beautiful thing is any type of business can be an llc some of the more popular types of businesses that use an llc include the following online business online business has been booming in the year 2020 and 2021. as i'm speaking to you now there are so many entrepreneurs that are entering into the online space why are they entering into the online space because online space provides vast opportunity there are limitless opportunities when it comes to running an online business because not only do you have that flexibility not only do you have that freedom of autonomy to move around but you can connect with individuals through an online business from anywhere in the world some other common businesses that use llcs are going to be your consulting firms are going to be your marketing firms which include facebook instagram marketing agencies it firms landscapers contractors and builders restaurant owners that want to create a restaurant for themselves and their families restaurants are very common llc as well as gyms gyms is another very common llc other llc's that you may want to take into consideration are going to be amazon llc's trucking llc's real estate llc's llcs the list of businesses that register for an llc go on and on and on as i mentioned earlier one of the greatest benefits that you have as an llc owner is that you're able to create that extra barrier between your personal assets as well as your business assets you have to ask yourself how important is it to you to separate your business from your personal and the reason why i ask this is because if you decide to register a business as a sole proprietorship everything including your business will be connected directly to you in the eyes of the law you and your business are the same person this means that if you're the same person under the eyes of the law you will be responsible for any type of obligations any sort of liabilities any sort of consequences that's directly connected with your business that's where an llc comes in if you have a registered llc your business assets ties connections will be tied to the llc alone which means that your personal life will not be impacted this means that the llc as a business entity is responsible for any type of debts or obligations that the llc alone owes to others the llc can owe obligations and liabilities and debts to others while you yourself as an individual will not have those types of obligations these sort of issues arise when your business is being sued and as we know anyone is trying to sue for whatever type of reason whether it's a legitimate reason or not so the most important thing that you have to do if you're considering forming and registering an llc it's important that you do it properly because if you fail to register your business properly then you will not receive the benefits that llcs offer in other words your llc will be ineffective if you happen to have any questions about anything that i talked about in today's video if you would like to learn a little bit more about whether or not an llc is right for you make sure you click the link in the description box below to book your free consultation with a professional who can evaluate your situation and who can provide you with the guidance that you're looking for as to whether or not an llc is right for your business ventures if you haven't gotten the chance to please make sure you hit the like and subscribe button as well as the bell notification so you won't miss out on any future videos it's time to invest in yourself it's time to rise if you would like to learn a little bit more about llc's business entities corporations go ahead and watch one of these videos you
Thanks phoebedu62c your participation is very much appreciated
- Leo Gillmore
About the author
I've studied eastern philosophy at Salus University in Elkins Park and I am an expert in analytic number theory. I usually feel melancholy. My previous job was electronics engineer I held this position for 22 years, I love talking about magic and trail running. Huge fan of Deftones I practice diving and collect match-related items.
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