A chief concern of all entrepreneurs is finding a way to do business while still being able to protect their personal wealth against any potential lawsuits. This goal is perhaps second only to making high profits and taking full advantage of all legitimate tax shelters.
Fortunately, many of today’s professionals believe they can achieve these goals by forming limited liability companies (LLCs). Although each state’s requirements for forming LLCs are slightly different, most of them are fairly similar. Some of these basic requirements are set forth below, followed by a brief overview of some of the positive and negative aspects of forming an LLC.
General Requirements/Suggestions for Forming an LLC
Naming your company. You must choose a completely unique name – one that's different from all others on file in your state. The name must clearly indicate that your company is an “LLC,” and it cannot contain any words forbidden or restricted by your state;
Filing Articles of Organization. This document (sometimes also called “a certificate of formation”) should indicate your company’s name, address, and other similar information and must be filed with your state’s Secretary of State Office. You may or may not have to pay a fee with this filing;
Drafting and executing an appropriate operating agreement. Apart from dictating how your business will be run and profits shared, be sure to include clear details about how you and the other members of your LLC will handle a possible future dissolution of the company;
Licenses and permits. Be sure to check with your Peachtree City attorney and Georgia Secretary of State about all of the required licenses and permits you may need to obtain;
Become familiar with legal hiring guidelines. All owners or “members” of an LLC should carefully research and review all current state and federal guidelines that cover the hiring of employees;
Be sure to ask the Georgia Secretary of State’s Office if you're required to “announce” the existence of your new LLC via a statement published in one or more newspapers.
Advantages of Running an LLC
Limited liability. Your personal assets are generally protected from most lawsuits that can be brought against your LLC;
Required paperwork. The ongoing paperwork required for running an LLC is often less cumbersome than what's required for other types of companies or corporations. (However, you should speak with your Peachtree City attorney about possibly combining the best features of an LLC with those of an “S” corporation);
Handling of profits upon dissolution. In general, the laws of your state may allow you and the other owners/members of your LLC to split up your profits as you choose.
Possible Disadvantages of Running an LLC
The drawbacks of forming an LLC (depending upon the statutes in the state where you choose to register your company), may require you to dissolve your LLC if one or more members choose to leave. However, you can sometimes make special provisions in your operating agreement – when they don't conflict with state law – that will make it unnecessary to terminate your LLC when a member leaves. Members of an LLC are viewed by the IRS as self-employed workers and will be taxed as such. (Note: LLCs mainly differ from LLPs in that the latter tend to be favored by groups of lawyers, accountants, and architects. Small businesses generally prefer to form LLCs to gain a bit more limited liability protection from possible future lawsuits. However, some states will not allow certain types of businesses like banks and insurance companies to form LLCs).
To obtain help with handling all of your Georgia business planning needs, please contact Shane Smith Law today. You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (980) 246-2656.