There are many benefits to creating an LLC, (limited liability company). Some business owners don't do this because they sometimes assume it will be too costly or time-consuming to do so. The pros in the benefits you can receive from creating an LLC are more than the cons, so long as you are not sole proprietorships and general partnerships. LLC's can provide limited liability protection to the owners/members that are not involved in the business debts and liabilities. Their personal assets (houses, vehicles, bank accounts, etc.) Cannot be overtaken by creditors, IF they are of sole proprietorship or general partnership, the owners and the businesses are then considered the same, which leave their personal assets susceptible. There are plenty of other benefits though to making your business an LLC.
Other than protecting assets LLC's can benefit a company in other ways as well. Any business profits/income or loss is available to be reported on the personal income tax returns and any tax that is due is paid on an individual level. Forming and LLC can also help new business' attract potential customers, future employees, vendors and other partners, because making your business an LLC shows that you can and have made a commitment to your business. LLC's also face fewer state-imposed annual requirements/ongoing formalities than other Corporations (S Corporations and C corporations) LLC's also have Flexible Management Structure which allows them to be managed by members or managers, other corporations have a Board of Directors to make major business decisions and officers who deal with the affairs on a day-to-day basis.
As was stated before, making your business an LLC can have some disadvantages as well. However, you will soon see that the advantages far outweigh the disadvantages. An Articles of Organization has to be filed with the state along with the state filing fees being paid. LLC formation is also more expensive than a sole proprietorship or general partnership, and neither one of these requires you to file documents with the state. There are some states that will require LLC members to publish their LLC formation in the local newspapers for several weeks.
Another disadvantage to making your business an LLC is the hassle of transferring ownership. Corporations can sale shares of stick to increase ownership. There is also Less Precedent for an LLC. Other than that, there are no other major disadvantages in creating an LLC. There are also requirements for forming and LLC and each state has its own amount and type of information they require. Most of the common requests are a Company Name, the purpose of your business, a registered agent, an organizer, a management structure, members/managers, and a legal address for the company. By the way if you need California virtual office just call us.
Once you have prepared a business plan, incorporated your business/formed and LLC, obtained your federal tax id number (or EIN), obtained a state tax id number, obtained the business licenses and permits that are necessary, selected an accountant and an attorney, opened a bank account for your business as well as obtaining a business credit card, set up a business account, establish credit, and obtain business insurance. Then you need to ensure you comply within the requirements of the government, determine your business location and create any contracts or service agreements/invoices so customers can be easily billed as well as the ability to track payments, obtain your business financing, create your business cards, letterhead, and envelopes. All that's left is to secure a domain name create your website and a marketing plan. Then you will be on your way to enjoying the benefits you will receive by taking that next step and making your business an LLC business.