Naperville Business Attorney Addresses Advantages of an LLC
For an entrepreneur, one of the most important decisions to be made in the early stages of business ownership is the selection of an appropriate business entity structure. With a number of options from which to choose, deciding on the best one requires careful consideration of the advantages and potential drawbacks of each, as well as the associated legal requirements or restrictions. Many business owners find that structuring as a limited liability company, or LLC, offers an ideal balance between risk and reward.
An LLC is Not Necessarily a Corporation
One of the most common misconceptions regarding LLCs is the abbreviation itself. The letters LLC stand for “limited liability company,” however it is mistakenly understood to represent “limited liability corporation.” This is a very important distinction, as LLCs are not automatically considered corporations, and are not necessarily taxed as such on the federal and state level. Instead, when structured as a partnership or sole proprietorship, tax liability is passed through to an LLC’s owners, or members, to be filed on individual tax returns.
Personal Asset Protection
The formation of an LLC establishes the company as a legal entity separate from its members. When operated correctly, and within the guidelines under law, this allows an LLC to protect the personal assets of its owners from risk related to the business. Failure to operate an LLC properly, however, can result in members’ personal assets being placed at risk. The liability shield that such a structure can offer, combined with its pass-through tax status, allows an LLC to offer business owners the flexibility to grow and the financial protection they need.
Forming an LLC
Illinois law requires certain procedures to be followed in the creation of any LLC business structure and choosing a name is the first step. Next, an LLC must nominate a registered agent who will be officially responsible for sending and receiving documents on behalf of the company. The Articles of Organization must be filed with the state of Illinois which delineate the details of the LLC, including its structure, purpose, duration, and management. Most LLCs also require the acquisition of a federal and state tax identification number for employment and reporting purposes. In addition to continued adherence to tax and regulatory requirements, many LLCs also draft an operating agreement, which provides internal rules and the designation of members’ rights and responsibilities.
Professional Legal Advice From a DuPage County Business Lawyer
If you have questions about structuring your business as an LLC, a qualified business lawyer can help. Contact an experienced Naperville business law attorney today to schedule a consultation. Our team has helped hundreds of clients with their business needs and is prepared to work with you to make your entrepreneurial vision a reality. Call 756-1160 for a consultation.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.