A limited liability company (LLC) provides the same benefits to members as shareholders have in a corporation.
An LLC is formed by submitting Articles of Organization to the Secretary of State.
Income that you receive as a member is taxed as an individual (no double taxation like a corporation).
See a CPA/tax consultant for tax ramifications of starting your business as an LLC.
Liability of Members of the LLC
The members are only liable for the amount of money or assets they have invested in the LLC.
- Fairly Easy to start
- File Articles of Organization with the Secretary of State.
- Low initial start-up costs
- Articles of Organization, business licenses, and fictitious name statements are relatively inexpensive. Please see your local jurisdiction for actual costs.
- Limited Alienability
- Selling your business is difficult because you are your business (i.e. no shares to exchange as in a corporation).
- Limited Ways to Grow Your Business
- Because your membership interest is non-devisable investors are frequently unwilling to invest in an LLC because they may not get a return on their investment (due to the lack of alienability of your ownership interest). Therefore, you are usually restricted to debt to grow your business.
- LLCs dissolve when a member dies or if one of the members file for bankruptcy.
NOTICE: The information on this website does not constitute legal advice and you should not rely on any information without seeking the advice of a competent attorney licensed to practice in your jurisdiction. This web site is both a communication and/or solicitation as defined by California Rules of Professional Conduct, rule 1-400. For further information, please click here.