FREQUENTLY ASKED QUESTIONS ABOUT LLCsDo I need an attorney to form an LLC ?
No, an attorney is not a legal requirement. You can prepare and file the articles of organization yourself; however, you need to be knowledgeable in the laws of the State of Texas.
You can use our service to form your LLC and save money on attorney's fees. However, if you are unsure of what entity would be most beneficial to your business, consult an attorney or accountant.
What is a Limited Liability Company ?
A limited liability company is a separate legal entity created by the state at the request of one or more individuals in order to conduct business. An LLC combines the single level tax advantage of a partnership and the limited liability protection of a corporation.
Why Should I form a LLC ?
LLC offers its members (owners) an important feature that the limited liability, in other words if your business suffers an unfortunate event creditors generally will not be able to come after your personal assets.
How many people are needed in order to establish an LLC ?
Most states including Texas allow one member LLCs. Massachusetts and the District of Columbia require at least two members to from an LLC.
What is the management structure of an LLC ?
The owners of an LLC are called members, members are analogous to shareholders in a corporation. Members may manage the LLC or they hire managers to do the job. After an LLC is formed members need to meet and draft the Operating Agreement. The Operating Agreement is an agreement reached by the members of LLC in order to define management arrangement and the members’ rights.
What is the tax situation of an LLC ?
This is one of the main advantages of an LLC, an LLC is normally taxed like a partnership, meaning that LLCs’ income will be passed through to the members and it will be reported and taxed on their individual tax returns. This eliminates the double taxation faced by corporations.
Should I form an LLC or S-corporation ?
Both from of business entities eliminate double taxation ie both offer the benefits of pass through taxation. However an LLC is much more flexible and does not have the restriction that an S-corporation imposes.
What are the advantages of an LLC ?
LLC offers a number of advantages that makes it ideal for small and large business, some of the advantages are:
- Pass through taxation ie the income of an LC is taxed only once at the time the members file their individual tax returns, very much like a partnership.
- Limited liability for the members, the liability for members in an LLC does not go beyond the amount the invested in the LLC.
- Flexible ownership and management structure, there is no restriction on the type or number of members in an LLC and members are free to choose the management structure they like.
What are the disadvantages of an LLC ?
- LLC is a new form of doing business and there are some questions still to be answered.