What is an LLC and How to get an LLC
One of the most common types of entities in the US today are LLC. They can be set up to meet specific business objectives and offer the flexibility and lack of formality that many business owners want. Since its humble beginnings in Wyoming, LLCs have grown to be so well-liked that now, more LLCs than corporations are created and registered with the states.
Our LLC guidebook offers business owners and legal experts a convenient overview of subjects relating to LLCs. It gives the foundational knowledge necessary to comprehend the structure and nature of LLCs. For easy reference, it also has a dictionary of terms about LLCs. With this knowledge, you’ll be more equipped to set up your LLC’s management control and other features.
Table of Contents
- Forms of Business Organizations
- Nature and Characteristics of an LLC
- Formation of LLCs
- Members
- Management
- Name Checker for avaiable LLC names
- Changes in Limited Liability Company Structure
- Tax and Reporting Requirements
- Foreign Limited Liability Companies
- A Glossary
An overview of LLCs
Due to the development and rising popularity of the limited liability corporation during the past three decades, the legislation governing business organizations has undergone a significant change (LLC). Since its humble beginnings as a piece of special interest legislation in Wyoming, the LLC has developed into such a well-liked structure that now, far more LLCs than corporations are created each year.
The limited liability company is a hybrid legal structure designed to combine the tax advantages of a partnership with the liability protections of a corporation. Germany is where the first limited liability business of today was founded in 1892. The idea caught on in South America and Europe, but it wasn’t until 1977 that the first LLC Act was passed in the US.
Nature and Characteristics of an LLC
An LLC is separate legally from its owners, often known as its members. In the case of an unincorporated partnership, the owners possess assets and accrue debt as a collection of individuals.
An LLC protects its members from some types of liabilities. Members of an LLC are only accountable for their activities and cannot be held liable for the torts and civil wrongs committed by other LLC members.
While an LLC gives you the advantages of a corporation, it still allows you to run your business with ease. For LLCs, there are only a few simple criteria for formation and filing.
Members
Members are any person(s) or organization(s) with a membership interest in a limited liability company. An LLC’s owners are its members, just as a corporation’s owners are its shareholders. The LLC’s assets are not owned by its members. They may or may not oversee the company’s activities and business.
Changes in LLC Structure
Mergers:
A combination of two or more business entities is referred to as a merger. In a merger, all of the assets, businesses, and liabilities of the merging entities are transferred to one, which remains in operation while the merging entities cease to exist. They include buying or selling a company, restructuring its activities, switching to a different entity type, or altering its organizational structure.
Conversion:
The states have laws allowing a limited liability corporation (LLC) to change into another business entity or allowing another business organization to change into an LLC. A conversion is a legal transaction in which one form of a business entity changes into another.
Changes and modifications:
Any limited liability corporation may amend its original articles of organization, subject to legislative restrictions, by adding a new provision, changing an existing provision, or completely deleting a provision. The sole restriction is that the new clauses must be ones that the articles of organization might legitimately contain at the time of revision.
Restatements
The filing of articles of restatement is allowed by many LLC Acts. The corporation can restate all of the terms of its current articles of the organization into a single, integrated document using articles of the restatement. A restatement is especially helpful when the articles of organization have undergone numerous revisions.
Corrections:
If the original articles of organization contained an error or were improperly signed, most states allow the filing of articles of correction. In addition to filing articles of organization, many states also allow for the filing of articles of correction.
Dissolution:
The LLC Acts contain provisions defining the circumstances leading to an LLC’s dissolution and winding up. These things could be a deadline or the occurrence of a certain event mentioned in the articles or operating agreements. As a result, an LLC can be created for a single business venture only, and the operating agreement might provide that the LLC be dissolved after the venture is over. The amount or percentage of members indicated in the operating agreement must agree to dissolve the LLC.
Administratively dissolved business:
A state filing office acts administratively to dissolve an LLC. The LLC is only permitted to do business as necessary to wind up, liquidate, and inform claimants after being administratively dissolved. Although the reasons for administrative dissolution differ from state to state, they typically involve failing to submit an annual report on time or paying any fees, taxes, or fines that are owed.
Foreign limited liabilities companies
Within the boundaries of the state where it was formed, an LLC is a domestic business. In every other jurisdiction, it is regarded as a foreign corporation. An LLC must register as a foreign LLC with that other state’s business entity filing office if it wishes to conduct business in a state other than the one in which it was formed.