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So you have decided to form an L.L.C. Business Structure?

Here are some things you should know...

The Definition of an L.L.C

According to the S.B.A. (Small Business Administration like a corporation, a limited liability company or "LLC," is a separate and distinct legal entity. This means that an LLC can get a tax identification number, open a bank account and do business, all under its own name.

What is an L.L.C. and

 how does it work? 

A limited liability company (LLC) is not a separate tax entity like a corporation; instead, it is what the IRS calls a "pass-through entity," like a partnership or sole proprietorship. ... The LLC itself does not pay federal income taxes, but some states impose an annual tax on LLCs.

Why have an 

L.L.C. Business Structure? 

Running your business as an LLC may help you sleep better because it gives you personal protection against these and other potential claims against your business. Not all businesses can operate as LLCs, however. ... You can also get limited liability for your business by forming a corporation.

What are the tax benefits

of an L.L.C. ?

A disregarded entity is treated the same as a sole proprietor, so your LLC's income will be treated like personal income. If you choose corporate taxation, your business will be taxed at a lower corporate rate for the first $75,000 of income. Any LLC can choose this tax treatment by filing IRS form 8832.

How do you pay yourself in an L.L.C.?

There are two ways to pay yourself as a limited liability company member manager, as LLC owners involved in running the business are called. You can withdraw money from the company accounts, or you can give yourself a salary. Yet which method of payment you can use depends on the federal tax classification you choose.

What is an Operating Agreement?

An LLC Operating Agreement is a document that customizes the terms of a Limited Liability Company (LLC) according to the specific needs of the owners, and outlines the financial and functional decision-making in a structured manner. Though writing an Operating Agreement is not a mandatory requirement for most states, it is nonetheless considered a crucial document that should be included when setting up a Limited Liability Company. The document, once signed by the members (owners), acts as a binding set of rules for them to adhere. The document is drafted to allow owners to govern the internal operations according to their own rules and specifications. The absence of this document means that your business has to be run according to the default rules of your state.

Why does your business need an Operating Agreement?

An LLC Operating Agreement is a 10-20 page contract document which sets up guidelines and rules for an LLC. It is always considered wise to draft an Operating Agreement, as it protects the status of a company, comes in handy in times of misunderstandings, and helps in carrying out the business according to the rules set by you. The businesses that do not sign an Operating Agreement fall under the default rules outlined by the states; these are very general and may or may not be right for your business.

What are the benefits an Operating Agreement provides for your business?

There are many issues that must be covered in the LLC Operating Agreement. The general format of the document includes the following:

  • Each member's ownership expressed as a percentage
  • The members' responsibilities and voting rights
  • A layout of the duties and powers of members
  • The profit and loss allocation among members
  • The rules related to holding meetings and taking votes
  • The issues related to the management of the LLC
  • Buyout and buy-sell provisions, when a member wants to leave and sell his/her share; also should include what will happen in the event of a member's death.

An Operating Agreement, once signed, should be kept safely as an important record of the business.

Available Business Structure Packages

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Platinum Package

Create Business Structure (L.L.C.) 

Create Multiple-Member Operating Agreement 

Apply for E.I.N. Number 

Using Wofford ECE Consulting Group, LLC as Registered Agent 

Submit Request

Gold Package

Create Business Structure (L.L.C.)

Create Single-Member Operating Agreement

Apply for E.I.N. Number

Using Wofford ECE Consulting Group, LLC as Registered Agent

Submit Request

Silver Package

Create Multiple-Member Operating Agreement (ONLY) 

Submit Request

Bronze Package

Create Single-Member Operating Agreement (ONLY)

Submit Request