A limited liability company, or LLC, is a legal entity in the united states that allows business owners several benefits. An LLC gives limited liability to the owners of the company, as well as giving them several distinct tax advantages. You can opt to set up an LLC with an attorney, use an online service, or do it yourself. For simple business startups with only one owner and a simple business model, the do it yourself LLC setup can be a great way to go.

Why Choose an LLC?

Some of the key considerations when starting a new business entity are liability and taxation. The various business entities include LLC, limited partnership (LP), partnership, corporation (both C-corporation and S-corporation), and sole proprietorship. There are other, less common variations, as well. All of these entities affect the liability of the owners. An LLC limits company owners' liability to the amount of their investment. They are not liable beyond that amount. The second main consideration in an entity formation is taxation. In a limited liability company the owners can elect to either be taxed as a corporation or as a pass-through entity. This gives the company a lot of flexibility.

LLC Tax Advantages

The main tax advantage in a limited liability company is the option to either be taxed as a corporation or as a pass-through entity. Being a pass-through entity means that gains and losses are passed through to the owners on their personal tax returns. This can also avoid double taxation that may take place when an entity is taxed as a corporation.

LLC Formation

You can form an LLC yourself by filing the proper paperwork with your state. Simply find the website of the secretary of state in your state. You will need to pay a fee and fill out some basic paperwork. Most states allow you to fill out the paperwork online create LLC. You will need to establish articles of organization to make your limited liability company valid. If your business is simple and you do not have multiple owners, it may make sense to do all of this on your own. Of course, if you have a more complex situation, the services of an attorney may be well worthwhile. Make sure you read all of the fine print with your LLC application. There are various rules that require you to hold annual meetings and pay certain fees to the state to keep your company in good standing.