LLC Defined
When it comes to starting your business, there are many legal structures to consider. One of the most popular business structures is known as a Limited Liability Company, LLC or LLC as a legal entity that gives business owners added benefits compared to a sole proprietorship or general partnership and helps protect owners assets.
LLC Meaning
Limited liability companies LLC american are defined as a type of business structure where owners of the LLC are called members and are partners in a business entity with all the protection of a corporation plus the ability to pass through any business profits and losses to their income tax return. LLCs differ from a sole proprietorship for example, in that LLCs ensure there is reduced personal liability, in case your business faces legal issues in the future.
Many business owners choose an LLC because they want the liability protection a corporation can provide in a business, without double taxation. LLC members can be individual business owners, several partners, or other businesses.
Advantages of a Limited Liability Company
There are several benefits of establishing a legal entity such as an LLC:
- LLC members are not personally liable for LLC decisions or actions taken by the LLC, helping protect against personal liability and personal assets of LLC members, in the case of legal consequences.
- The business profits and losses can be shared amongst the members however they prefer to divide them; it does not have to be equal, though everyone claims their profits and losses on their income tax return. LLCs can also help make it easier for federal income tax purposes and ensure you are on the right side of the law with the internal revenue service.
- There is much less paperwork required to create and maintain an LLC by comparison to a Sub Chapter S corporation, which is similar in many ways to an LLC.
- LLCs are customizable beyond standard LLC agreements. For example, through an LLC operating agreement members of an LLC customize various terms to be more specific to the needs of the business. A written LLC operating agreement can help make it clear who is responsible for what, which is an important legal component of building a business.
Disadvantages of Limited Liability Company (LLC)
- In many states, if a member dies or leaves the LLC, the business entity must be and a new LLC created.
- Since members are considered LLC employees, they are responsible for paying their self-employment tax contributions of 15.3%.
- LLCs cost more to start and maintain than a sole proprietorship or general partnership. A basic LLC can cost anywhere from $100 to $500USD to get started. That said, the added protection of LLC owners is why it is a popular choice for a business entity.
- Equity and compensation can get a little complex and challenge with an LLC. Make sure you do extensive research on the best location to form an LLC.
What does LLC means to your Company
LLCs are separate from you as an individual, you will need to choose a business name different from your own and that no other LLC in your state is already using. Your official business name should have LLC at the end, such as ABC LLC.
Once the business name is chosen, you will need to complete and file Articles of Organization, which is a form that lists the companies name, address, and all of the names of the members. Articles of Organization are typically filed with your state Secretary of State but double-check in your state to be sure. Alaska, Hawaii, and Utah have no Secretary of State and in Massachusetts, Pennsylvania, and Virginia you will file with the Secretary of the Commonwealth. There is typically a filing fee to be paid as well.
When the Articles of Organization, you will then need to apply for any business licenses and permits you will need to operate legally. Remember, as an LLC member, you will want to ensure you
Check with your States income tax authority to learn whether your state taxes LLC income. LLCs are not taxed at a federal level, but some states do tax LLC income so you want to double-check the requirements to ensure you remain compliant with the internal revenue service (IRS)
Would you open an LLC?
Just because an LLC is a popular business structure for businesses, does not necessarily mean it is right for you. That said, operating your business as a separate entity can offer much-needed peace of mind when growing your business.
If you are looking to ensure your assets are protected a limited liability company is a great option to consider.
Difference between a sole proprietorship and an LLC?
An LLC exists completely separate from the members who are part of the LLC.
A sole proprietorship popular among freelance and gig-economy workers, on the other hand, leaves the individuals exposed to personal liability.
Cost to start an LLC
Depending on the state and other fees, an LLC costs $150-500$ to get started. Additionally, yearly fees may also apply.
Most common business structure
According to the IRS, the four most popular types of business structures, are the sole proprietorship, partnership, corporation, and S corporation, as well as a Limited Liability Company.
LLC operating agreement
An LLC operating agreement is where members of an LLC can define specific responsibilities, compensation, equity, and more.
Final Thoughts: Is American Samoa Great Spot to Start an LLC?
All in all, American Samoa makes up for one of the best spots to form and run LLC business operations. American Samoa offers flexible taxation and heightened freedom to run extensive business operations. American Samoan LLCs do not face rigid rules, laws, and regulations, unlike US states. In the past, many startup businesses have had the chance to form and run successful LLC operations and continue to drive unprecedented growth.
Find out the perks, process, and added benefits to start an anonymous LLC in America Samoa and how it makes it easier for LLC owners to drive growth in a short time.
Setting up a limited liability company (LLC) in American Samoa can help you establish an independent legal entity for conducting business operations and holding cryptocurrencies such as NFTs. LLCs are available in states, territories, and insular areas such as Puerto Rico and American Samoa. Also known as Limited Liability Companies, LLCs are special entities created under state laws that provide liability protection to owners involved in business activities.
You can go directly to LLC.AS.GOV to set up an LLC or a company like Zenbusiness.