- https://www.investopedia.com/terms/l/llc.asp
he LLC has two main advantages:
- It prevents its owners from being held personally responsible for the debts of the company. If the company goes bankrupt or is sued, the personal assets of its owner-investors cannot be pursued.
- It allows all profits to be passed directly to those owners to be taxed as personal income.2 That avoids "double taxation" of both the company and its individual owners.
he LLC has two main advantages:
- It prevents its owners from being held personally responsible for the debts of the company. If the company goes bankrupt or is sued, the personal assets of its owner-investors cannot be pursued.
- It allows all profits to be passed directly to those owners to be taxed as personal income.2 That avoids "double taxation" of both the company and its individual owners.
What Are Some Examples of LLCs?
LLCs are more common than many realize. Alphabet, the parent company of Google, is an LLC, as are PepsiCo Inc., Exxon Mobil Corp., and Johnson & Johnson.6
There are many much smaller LLCs. There are variations that include sole proprietorship LLCs, family LLCs, and member-managed LLCs.
Many physicians' groups are registered as LLCs. This helps protect the individual doctors from personal liability for medical malpractice awards.
Limited liability companies, on the other hand, allow the profits to be passed directly to the investors so that they are taxed only once, as part of the investors’ personal income.2
https://www.investopedia.com/terms/l/llc-operating-agreement.asp
Even if a business venture only has a single owner/employee, it can still be beneficial to codify the relationship with an LLC operating agreement. Having an operating agreement establishes a legal boundary between the LLC and the owner, so that the owner is not held accountable for the LLC's debts or liabilities. Otherwise, creditors to the LLC may pursue the owner's personal assets.5
An operating agreement also allows the owner to codify the rules of succession for their business, as well as governance procedures such as meetings and voting. Without an operating agreement, ownership of the business is handled according to the state's default LLC rules.
LLCs are more common than many realize. Alphabet, the parent company of Google, is an LLC, as are PepsiCo Inc., Exxon Mobil Corp., and Johnson & Johnson.6
There are many much smaller LLCs. There are variations that include sole proprietorship LLCs, family LLCs, and member-managed LLCs.Many physicians' groups are registered as LLCs. This helps protect the individual doctors from personal liability for medical malpractice awards.
Limited liability companies, on the other hand, allow the profits to be passed directly to the investors so that they are taxed only once, as part of the investors’ personal income.2
https://www.investopedia.com/terms/l/llc-operating-agreement.asp
Even if a business venture only has a single owner/employee, it can still be beneficial to codify the relationship with an LLC operating agreement. Having an operating agreement establishes a legal boundary between the LLC and the owner, so that the owner is not held accountable for the LLC's debts or liabilities. Otherwise, creditors to the LLC may pursue the owner's personal assets.5
An operating agreement also allows the owner to codify the rules of succession for their business, as well as governance procedures such as meetings and voting. Without an operating agreement, ownership of the business is handled according to the state's default LLC rules.
What to Include in an LLC Operating Agreement
There are many issues that must be covered in the LLC operating agreement. The general format of the document includes the following:
here 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 their share (should also include what will happen in the event of a member's death)
LLC operating agreements should also outline the specific definitions of terms used in the agreement, as well as list the purpose of the business, a statement of its intent to form, how it will handle new members, how it chooses to be taxed, how long it intends to operate, and where it is located.5
Just as “one size doesn’t fit all,” the state default LLC rules don’t suit all. The best way to counter this problem is by writing an operating agreement, which gives freedom, protection, and control to your business. Though it's best to include an operating agreement in the initial stages, if you have missed on that, it’s never too late to put it in place, provided all members agree to it. The document can also be modified at a later stage with the guidance and help of an attorney.
There are many issues that must be covered in the LLC operating agreement. The general format of the document includes the following:
here 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 their share (should also include what will happen in the event of a member's death)
LLC operating agreements should also outline the specific definitions of terms used in the agreement, as well as list the purpose of the business, a statement of its intent to form, how it will handle new members, how it chooses to be taxed, how long it intends to operate, and where it is located.5
Just as “one size doesn’t fit all,” the state default LLC rules don’t suit all. The best way to counter this problem is by writing an operating agreement, which gives freedom, protection, and control to your business. Though it's best to include an operating agreement in the initial stages, if you have missed on that, it’s never too late to put it in place, provided all members agree to it. The document can also be modified at a later stage with the guidance and help of an attorney.
If I Have an LLC Operating Agreement Do I Need a Business Plan?
There's no legal requirement for an LLC to have a written business plan, but there are still clear advantages to having one. A well-structured business plan is an important tool to set out the goals and values of an enterprise and provides an objective way of assessing whether or not those goals are being met.
There's no legal requirement for an LLC to have a written business plan, but there are still clear advantages to having one. A well-structured business plan is an important tool to set out the goals and values of an enterprise and provides an objective way of assessing whether or not those goals are being met.
Does an LLC Have Shares of Stock Like a Corporation?
No. While it is sometimes common to describe LLC membership as a "share," this is not the same as stock units in a corporation. While members of an LLC have the right to share profits and make decisions concerning their company, an LLC cannot raise money by issuing stock shares.6
No. While it is sometimes common to describe LLC membership as a "share," this is not the same as stock units in a corporation. While members of an LLC have the right to share profits and make decisions concerning their company, an LLC cannot raise money by issuing stock shares.6
What to Include in an LLC Operating Agreement
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 their share (should also include what will happen in the event of a member's death)
LLC operating agreements should also outline the specific definitions of terms used in the agreement, as well as list the purpose of the business, a statement of its intent to form, how it will handle new members, how it chooses to be taxed, how long it intends to operate, and where it is located.5
Among all forms of companies, starting an LLC is easier, with fewer complexities, paperwork, and costs. This form of company comes with a lot of operational ease with less record-keeping and compliance issues. LLCs also provide a lot of freedom in management as there is no requirement of having a board of directors, annual meetings, or maintaining strict record books. These features reduce unnecessary hassles and help save a lot of time and effort.
The formation of an LLC broadly requires filing the “articles of organization” which is a document including basic information like business name, address, members. The filing is done with the Secretary of State for most states and has an associated filing fee.
Next comes creating an Operating Agreement, which though is not mandatory in most states but is recommended especially for multi-member LLCs. On registration of the business, other licenses and permits have to be obtained.5
Additionally, some states like Arizona and New York require publishing about the LLC formation in the local newspaper.67
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 their share (should also include what will happen in the event of a member's death)
LLC operating agreements should also outline the specific definitions of terms used in the agreement, as well as list the purpose of the business, a statement of its intent to form, how it will handle new members, how it chooses to be taxed, how long it intends to operate, and where it is located.5
Among all forms of companies, starting an LLC is easier, with fewer complexities, paperwork, and costs. This form of company comes with a lot of operational ease with less record-keeping and compliance issues. LLCs also provide a lot of freedom in management as there is no requirement of having a board of directors, annual meetings, or maintaining strict record books. These features reduce unnecessary hassles and help save a lot of time and effort.
The formation of an LLC broadly requires filing the “articles of organization” which is a document including basic information like business name, address, members. The filing is done with the Secretary of State for most states and has an associated filing fee.
Next comes creating an Operating Agreement, which though is not mandatory in most states but is recommended especially for multi-member LLCs. On registration of the business, other licenses and permits have to be obtained.5
Additionally, some states like Arizona and New York require publishing about the LLC formation in the local newspaper.67
Flexibility in Allocation
LLC provides a lot of flexibility when it comes to investing as well as profit sharing.
In an LLC, members can opt to invest in a different proportion than their ownership percentage i.e. a person who owns 25% of the LLC, need not contribute money in the same proportion for initial investment. This can be done by creating an operating agreement, which states percentages of company profits (and losses) for each member regardless of the amounts of their initial investments. So it’s possible to have an outside investor put money
LLC provides a lot of flexibility when it comes to investing as well as profit sharing.
In an LLC, members can opt to invest in a different proportion than their ownership percentage i.e. a person who owns 25% of the LLC, need not contribute money in the same proportion for initial investment. This can be done by creating an operating agreement, which states percentages of company profits (and losses) for each member regardless of the amounts of their initial investments. So it’s possible to have an outside investor put money
Bottom Line
LLCs are a good combination of protection with flexibility and tax benefits. It provides an array of taxation alternatives while shielding individual members from personal liability. LLCs are seen as apt for small businesses as there is less hassle and complexity in their functioning. However, consulting an accountant or lawyer for expert opinion is advisable before taking the final call
This is a full-time hourly phone position that also offers the opportunity to work extra hours based on the business needs and your availability. You do not need a finance background or a degree to succeed in the role.
https://jobs.fidelity.com/job-details/15219127/early-career-customer-service-associate/
LLCs are a good combination of protection with flexibility and tax benefits. It provides an array of taxation alternatives while shielding individual members from personal liability. LLCs are seen as apt for small businesses as there is less hassle and complexity in their functioning. However, consulting an accountant or lawyer for expert opinion is advisable before taking the final call
This is a full-time hourly phone position that also offers the opportunity to work extra hours based on the business needs and your availability. You do not need a finance background or a degree to succeed in the role.
https://jobs.fidelity.com/job-details/15219127/early-career-customer-service-associate/
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