When a person is first setting up a business of their own for the first time one of the most important decisions they will need to make is just what kind of business structure it is they are after. In many countries today a person has the chance to opt for either sole proprietorship with their business or they can have a partnership or if they want to they can make it into a corporation. But when it comes to the USA and also the UK a person has the chance to set up and form a business limited liability company if they wish. start an LLC or corporation in Florida
But just what is a limited liability company (LLC)? Below we will take a look at what makes up a limited liability company.
Firstly this is a type of business where the ownership of it will use features to be found in either a business which has either a corporation or partnership structure. However it is not in fact either a corporation or partnership. Sometimes however an LLC may be referred to as a limited liability corporation and this terminology is not correct.
The owners of any type of LLC are called members rather than shareholders or partners and the number of people it considers to be members can vary and there is no limit on how many the LLC has. In fact one person alone could be an LLC if they so wish.
There are many advantages for a business to be set up as a limited liability company today and below are just a number of these.
1. Although it exists as a separate entity in much the same way as a corporation does when it comes to the business having any kind of debts the members of LLC can not be held personally liable for them. The only way they can is if they have signed a personal guarantee.
2. All LLC businesses have the right to choose how the profits if any are distributed between its members. Whereas with a partnership any profits the business make will have to be shared equally (50-50) between those in it.
3. Unlike corporations a Limited Liability Company business is not required to keep any kind of formal minutes or have minutes. They also are not required to record any resolutions that may be made between the members. This therefore makes such a business much easier to operate.
But as well as the advantages to be gained from running your business as limited liability company, but there are disadvantages as well. One of the most important being that they have a very limited life. What we mean by this is that if you set up a business limited liability company and a member either dies or is recorded as being bankrupt then the business will need to be dissolved. Whereas with a corporate business this can go on until those involved choose to wind the business down.