Going into business for yourself can be a confusing process if you don't do your research. Most individuals doing this are forming their business as a Limited Liability Company, or more commonly referred to as an LLC. This classification is giving business owners the characteristics of both a partnership and a corporation. The LLC classification will allow owners to have limited liability in the company and also offer the owner a little bit more flexibility and is generally used for companies that are owned by one person.
One main advantage of classifying your company as a Limited Liability Company is that the owner or owners will be protected from most or all of the liability of the company's business dealings and debt, depending on the state the company is located in. So if someone were to file a suit against the company, the limited liability would prevent the suit from taking personal assets from you. Another advantage is that this classification does not require as much paperwork as a corporation classification.
When a company is at a corporate classification, there are meetings that need to be recorded and detailed records of minutes from the meetings. The last big advantage is how the company is taxed. In a Limited Liability Company, the profits will be taxed on a personal level and not at the company level.
There are two very important documents to retain as this classification. You will need to have your articles of organization and also your operating agreement. The articles of organization is just a formal document that states you are a legitimate business. Once they get approved by the secretary of state, you will want to keep them in a safety deposit box or another safe area that is easily accessible. You will need them from time to time.
The other document is the operating agreement. This is just as important as the articles of organization. This is basically the formal rule book of your Limited Liability Company. It will govern the way you do business and how you operate your company. Finally, it will name all the officers of your company. Keep in mind that this document must be signed as soon as it is created and completed
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