The creation of a Limited Liability Company, or LLC, may seem daunting to many who would like to start setting up their business. Although the process is easily accessible to the layman, the help of formation services may still be the best idea for you.
An LLC is a vastly popular business structure because of its many benefits and as it is the easiest business structure to form that offers personal liability protection. This means that even if the business falls into financial ruin, or the business is sued, the personal assets of the owner(s) are protected. The cars, houses, and bank accounts are safeguarded against being seized in lieu of debt.
What are the different types of LLCs?
There are four different types of LLCs, however, they all feature the same characteristics that make LLCs so unique: they are a mix of other business entities in relation to limited liability and pass-through taxation. They are:
1. Domestic LLC
A domestic LLC is one where the business operates in the state where it was created. This is the most general LLC, and the one which most people are familiar with.
2. Foreign LLC
Once a business makes the decision to have a physical presence in any other state than the one it was formed, then it’s known as a Foreign LLC.
3. Professional LLC
Should the business operate on a professional level, e.g. a medical or legal practice, then the creation of a Professional LLC is required. For the formation of the Professional LLC, some members of the LLC have to have the required state licenses in order to validate their qualifications.
4. Series LLC
The Series LLC is singular in that a single, often called “parent” LLC gives limited liability protection to a number of other businesses, commonly referred to as “child” businesses. Furthermore, each of the “child” businesses is safeguarded against the potential liabilities of the other “child” business that fall under the single Series LLC.
You cannot form a Series LLC in every state, and currently only 17 states allow it.
How do you form an LLC independently?
The creation of an LLC is not overly difficult and consists of only six stages:
1. Select the state where your business will be created.
2. Choose a unique name.
3. Decide on a Registered Agent.
4. File your LLC with the State.
5. Establish an LLC Operating Agreement.
6. Get an Employer Identification Number (EIN).
However, there are benefits to hiring an LLC Formation Service even if at first glance the process of forming one by yourself isn’t too complicated.
So, what are the benefits to hiring a Formation Service and what do they do?
Surprisingly, the utilization of a formation service may decrease the startup costs of your business. The use of a formation service gives you the ability to concentrate primarily on expanding your business.
Most of these formation services offer Registered Agent services, a free Operating Agreement, and a hassle-free CPA Assessment. A registered agent is required in most states and is either a person or a business entity that has the authority to accept legal documents on behalf of the business. Furthermore, an LLC Operating Agreement is a necessity for all LLCs, and it is a legal document which explains the ownership structure of the business, as well as member responsibilities. An CPA assessment helps to better understand the financial state of the business. All of the above are useful in that they take stress off of the owner so that they may focus solely on their business and how they wish it to grow. TRUiC provides a thorough explanation of not only the steps to form an LLC, but also the various formation services and the areas wherein they specialise. Read more to find out which service is best for you and the extent to which they can help your business flourish.