What is an LLC?

The Limited Liability Company is a relatively new entity type that was developed towards the end of the 20^th century as an alternative to a corporation. Modeled after a German entity type (GmBH), the US LLC originated in Wyoming in the late 1970s, emerged in Florida a decade later and by the early 1990s existed in all US jurisdictions. Since that time limited liability companies have steadily gained in popularity largely because they combine liability protection previously reserved for corporations with single taxation of partnerships. LLCs also have fewer requirements than corporations making them easier to maintain. LLC's are separate and distinct from its owners who are called "members."  LLC's do not issue shares of stock like C Corporations and S Corporations. If you would like to read about S Corps and C Corps check out our blog here.

Ownership/ Member details about LLC's

There are 2 ways to reflect ownership of an LLC.  It can be reflected as a percentage or by membership units which are similar to shares of stock in a corporation. The number of members of an LLC is unlimited and members can be individuals, partnerships, corporations, trust, nonresident aliens, etc.

Things to know about LLC's

• Limited Liability- Absent any specific personal guarantees, the amount at risk for members is limited to their investment in the LLC. The personal assets of the members are generally beyond the reach of creditors. This protection is for all members of the LLC unlike an LLP where one general partner must remain liable for partnership debts. 
• Tax Benefits- LLC members may also enjoy the same flow-through tax benefits which are applicable to partners of a partnership.
• Easier to maintain- LLC's are not required to hold annual meeting and to record meeting minutes. LLC's are known for their operational ease.
• Heightened Credibility- Forming your company into an LLC can increase the credibility associated with your business.

Incorporating your business can give you and the other owners of your business a number of benefits. For the benefits of incorporating you can look HERE. Incorporating your business can be an easy task with your friends at American Incorporators Ltd. to help you. It takes completing these simple tasks and we’ll be there to help you along the way

1)      To be a legal entity you must register your business name with the Secretary of State. If you have already thought of your name check it HERE to make sure it is available in your state.  If you do not already have a name, that’s okay think of a creative name for your business that will be attractive for customers.

2)      Decide what kind of entity you would like to incorporate. LLC, S Corp, C Corp and what state you would like to incorporate in. 

3)      Call Us- 800-421-2661

4)      Depending on your states regulations we could get your documentation and your business up and running in just a few days. 

If you want to download our "How To Incorporate a Business With American Incorporators Ltd" Guide click HERE

There are 5 Different types of entities than can own a business.

• C Corporation
• S Corporation 
• LLCs & LLPs 
• General Partnerships
• Sole Proprietorships

1. Limit the Liability and Protect the Assets of Owners
2. Increase Tax Savings 
3. Raise Capital 
4. Perpetual Existence
5. Simple Estate and Family Planning

 

When forming a business in Arizona, you’ll want to be mindful of certain requirements and potential restrictions. You will have the option to form a Corporation or a Limited Liability Company. Before you make your decisions, it’s best to understand the difference between the two, and how Arizona will treat your business formation.

Corporations 

Corporations will be required to have a name that is entirely distinguishable from any other business registered in the State of Arizona. The name of your business must also include a corporate identifier. For corporations, you can use “Association, Corporation, Company, Incorporated, Limited” or any abbreviations of those corporate identifiers.

Arizona does not require that you list a specific business purpose on your Certificate of Incorporation. They do require that you list at least one director on your Certificate of Incorporation. The State of Arizona does require publishing.

Limited Liability Companies

When forming an LLC an Arizona, your company name must also be different and distinguishable from any other registered authorized Arizona business entity or any reserved names on record. You’ll need to include a corporate identifier. LLCs can use “Limited Liability Company, Limited Company” or any abbreviation of these words.

LLCs are not required to list a specific purpose on your Certificate of Formation and are also not required to list members on their formation documents.

Both Corporations and Limited Liability Companies may have varying annual requirements. To keep up with Arizona’s requirements, we recommend visiting their Secretary of State website, or giving us a call.

If you’re a small business looking to get started in Arizona, The Arizona Commerce Authority is a great resource where you can learn about programs that can help you get your business up and running. Arizona businesses also recommend Arizona’s SBDC Maricopa County Colleagues division. 

If you're ready to form a business in Arizona, we offer incorporation and registered agent services. Either click below or call 800.421.2661 to get started!

This week, we’ll be covering the basics of forming a business in Alaska.

Like many states, Alaska requires that your corporation or limited liability company name be different from any registered business on file. Corporations and limited liability companies must also have a corporate name identifier. These identifiers include, “Corporation, Incorporated, Inc., and Corp.” For LLCs, you can use “Limited Liability Company or LLC.”

If you’re forming a corporation, Alaska does require that you list a specific business purpose on your Certificate of Incorporation. This means that you’ll have to provide a purpose for the general business you’ll be conducting. Alaska will require that you list one or more directors on the document. You must also be at least 19 years of age to form your business. Alaska’s standard number of shares is 1000, at no par value.

Limited Liability Companies are not required to list a specific purpose on their Articles of Formation. They do require that you list one or members on your document, and have an age requirement of 19 years or older.

Alaska may have annual filing requirements, often known as annual reports, for both corporations and limited liability companies. The filings may be due on a specific day or during a specific time and can cost varying amounts. For update annual requirement information, you can visit Alaska Secretary of State’s website.

If you want to learn more about current businesses in Alaska, take a look at Alaska Business Monthly.

Is your small business registered in Alaska? If we are acting as your registered agent, you can be featured in our Small Business Spotlight. Just comment your name and your company's name below!

This reminder is for Delaware Limited Liability Companies only.

 Your Annual Franchise Tax fee of $250 is due to the State of Delaware on or before June 1, 2013. This fee is paid in arrears for the preceding year, meaning that in 2013, you are paying your tax for the year of 2012. The $250 is a flat fee required to be paid by all limited liability companies regardless of company income.  If your fee is not paid on or before June 1, 2013, a late fee along with a 1.5% monthly interest will be assessed by the State of Delaware.

 If you use American Incorporators as your Registered Agent in the State of Delaware, you will be receiving additional reminders including instructions via e-mail and postal mail. If you have any questions about how to pay your tax, or are interested in checking the status of your company, please call 800.421.2661. 

When deciding on an entity type for your business, you should review how taxes will be handled. Not all entity types are taxed the same way. In this post, we’ll highlight how Limited Liability Companies are taxed differently than corporations.

One feature that Limited Liability Companies do not share with Corporations is their tax options. Limited Liability Companies have the option to do partnership taxation. This process is only available to partnerships, S Corporations, and Limited Liability Companies, and may also be known as “pass through taxation.”

LLC Pass Through Taxation can be broken down into the following 3 characteristics…

• Pass through taxation creates a situation where the business entity will not be taxed.
• Income passes through the business entity to its members.
• How the LLC will report their annual income will depend on its number of members.

This pass through taxation option is one of the notable characteristics of Limited Liability Companies. As always, it is best to do your research. When reviewing an entity type and its tax options, we usually recommend consulting an accountant in order to better understand your options and how you can achieve the maximum benefit for your business. 

If you'd like more information about Limited Liability Companies and how they can differ from Corporations, you can visit our Entity Comparison Chart. Our free Pass Through Taxation Info Sheet (available below) highlights information about pass through taxation, along with defining the most common characteristics of Limited Liability Companies.