FAQ's: Limited Liability Company

What is a Limited Liability Company (LLC)?

An LLC is a newer form of business entity that offers the liability protection of a corporation, in that the owners of the business cannot be held accountable for the business debts and obligations. Further the LLC has pass-through taxation, similar to that of an S-Corporation. The LLC is not required to file a tax return unless it has more than one member/owner. Once the LLC has multiple members it is considered a partnership for tax purposes.

Who can form an LLC?

Anyone can form an LLC. There is no age, residency or other legal requirement. There are states that require the manager or members of a corporation be a certain age. View our State Specific Information page for details specific to your state.

What paperwork is required to form an LLC?

When creating an LLC Articles of Organization or Certificate of Formation must be prepared and submitted to the respective Department of State for filing. The information required in the formation document varies per state. When forming your company we will request the mandatory information from you in order to complete the filing. View our State Specific Information (https://www.accumera.com/state-information/) page for details on what information is required for your filing.

How many people are needed to form an LLC?

States require a minimum of one member when forming an LLC, there is no maximum. When Accumera forms your company we will act as the initial organizer.

What is the organizational structure of an LLC?

LLC’s are organized by members and managers. The members of the LLC are like the shareholders of a corporation as they are the owners of the company. The managers are elected to run the daily operations of the company on behalf of the members, which makes them like the officers of a Corporation. An LLC can be member-managed whereby the members run the daily operations of the company, or manager managed.

How is an LLC managed?

LLC’s are managed by members or managers of the company. If the members are managing the company, all managing people will be equally in charge of everything that happens with the company. If the managing members choose to do so, they can elect managers to be in charge of all the company affairs and run the daily operations of the company.

What is an LLC Operating Agreement?

The LLC operating agreement is a document that states the internal rules and regulations for how your LLC will operate. Each state has different requirements for what must be included in the operating agreement. Included with Accumera’s LLC kit are state specific operating agreements that you can use for your company. Please note that operating agreements do not get submitted or filed with the respective Department of State.

Am I required to hold annual meetings?

LLC’s are not required to hold annual meetings or record any minutes of any meetings that they may have. Although it is not mandatory to hold meetings or record minutes, it is recommended in order to discuss any LLC issues and record notice of the outcome. Contact us if you would like assistance with drafting your annual corporate minutes.

Should I choose an LLC or an S-Corporation?

When choosing whether you want to form an LLC or an S-Corporation, you should consider all of the positive and negative aspects of each company. Both LLC’s and S-Corporations have pass-through taxation, but LLC’s have some benefits and are a little more flexible than S-Corporations. For instance, LLC’s allow you to have as many members (shareholders) as you would like while S-Corp’s only allow you to have a maximum of 100 shareholders. We suggest that you speak with your tax professional to determine if you should form an LLC or S-Corporation.

What is the publication requirement?

Some states, such as Arizona (Corp’s & LLC’s), Georgia (Corp’s only), Nebraska (Corp’s & LLC’s), New York (LLC’s only) and Pennsylvania (Corp’s only) require that new companies run notice of formation in local newspapers after the company is formed. Accumera will prepare and run the associated notices for you, file them as necessary and provide proof of publication when complete.Contact us for more information on the publication process in your state.

Does my LLC need a registered agent?

In most states your LLC is required to have a Registered Agent who can accept service of process on behalf of the company. If required your company must have a Registered Agent in every state where your company is registered. Further, you must maintain the Registered Agent with the Secretary of State in order to keep your company active. Accumera can provide you with registered agent services as required in your state.