The Easiest Way to Set Up and Manage Your Business

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Below, we cover what a limited liability company is, who should consider forming one and the pros and cons you should know. Consider this your guide to getting your LLC up and running in no time!


An LLC, or limited liability company, is a business entity type that allows business owners to take advantage of the taxation of a sole proprietorship and the liability of a corporation. If that definition made your brain hurt — you aren’t alone. LLCs are complicated, but with a team like us at your side, you’ll be able to navigate the complexities of starting a business with ease. Let’s start by breaking it down.

In layman’s terms, an LLC offers the best of both worlds for business owners as it simplifies the tax process while separating your business’ assets, debts and liabilities from your own. This means you won’t be held individually liable for company debts or other responsibilities, but can still enjoy the ease of merging your business profits with your personal income for tax purposes.


  • Limited Liability Protection – The company – not the members – will be liable for any debts and liabilities incurred by the business.
  • Pass-Through Taxation – Your business’s net profits and losses are “passed through” to the personal income of the owner(s) of the LLC and are taxed as traditional income.
  • Member-Managed LLC – LLCs allow you to form a member-managed system, where all members are equally operating the business themselves.
  • No Ownership Restrictions – LLCs do not have any residency restrictions, meaning you have the ability to partner with foreign nationals.
  • Versatile Tax Status – LLCs can choose how they are treated as a taxable entity. In addition to the pass-through taxation mentioned above, LLCs may also elect to be taxed as an S-Corp or C-Corp.
  • Flexible Profit Distribution – LLCs allow net income and profits to be allocated to members in proportion to their ownership levels.
  • Minimal Compliance Requirements – LLCs are largely considered simpler and flexible, as they aren’t required to comply with the same state laws and regulations as corporations.

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Is Starting a LLC Right for You?

In general, an LLC will operate as a Domestic LLC where it is formed and operates within your state, or a Foreign LLC where it operates in a different state than the one in which it was formed. Outside of these conditions, there are eight different types of LLCs to be aware of.

Understanding LLC Requirements

Unlike corporations, limited liability companies are not required to hold annual meetings or keep minutes, but there are certain LLC filing requirements you’ll need to keep in mind.

  • Every LLC should have an LLC Operating Agreement. This may include standards for LLC governance, ownership parameters or rules around member changes.
  • LLCs are required to file annual or biennial reports with their Secretary of State. Failing to do so can result in the dissolution of your business.
  • There are various filing fees associated with forming an LLC. This includes incorporation paperwork fees, annual fees, personal taxes, franchise tax and any applicable business license fees.
  • When determining what to call your new company, you’ll need to follow state rules for naming your LLC.

Single-Member LLC

This is an LLC with only one member.

Multiple-Member LLC

This is an LLC with multiple members.

Member-Managed LLC

The most common type of LLC, member-managed LLCs allow all owners to operate the business with equal responsibility.

Manager-Managed LLC

If some of your business partners want to remain passive in running the business, then you’d delegate one person to operate as the manager of the company.

Series LLC

A Series LLC allows you to create an umbrella company that oversees a series of separate legal entities. This type of entity is only available in Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, Texas and Utah.


An L3C company is a for-profit company with a stated philanthropic social purpose. It follows a hybrid business structure using the legal and tax flexibility of an LLC, social benefits of a nonprofit organization and marketing advantages of a social enterprise.

Restricted LLCs

Restricted LLCs enter an operational agreement where they cannot make distributions among members until 10 years after forming. This type of LLC is only available in Nevada.

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