Limited Liability Company (LLC)

A Limited Liability Company (LLC) limits the liability of their owners, protecting its owners from personal responsibility for its debts or liabilities. Limited liability companies combine the characteristics of a corporation with those of a partnership or sole proprietorship. Similarly to a partnership they are only taxed at the personal level. It is typically well suited for a company with a single owner. Some states require that LLC’s be dissolved if one of the owners passes away or if an owner declares bankruptcy.

Single member LLC’s often do not need an employee identification number (EIN), but an EIN would be required if you plan to hire staff or have a separate bank account.

How to set-up an LLC

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1. Decide on a business name and a location.
2. Choose someone to be the registered agent (this can be one of the owners). The registered agent receives all legal documents on behalf of the LLC.
3. Draft and file articles of organization with your state.
4. Draft your operating agreement, which is similar to the bylaws or a partnership agreement. This agreement  outlines how the company will be run.
5. Receive an EIN and register your corporation with the IRS and any local state tax authorities.
6. Open a bank account.  You want to make sure you keep your business’s finances as separate as possible.

If you have further questions it would be helpful to consult a lawyer or financial professional in your specific state to help decide.