Forming a limited liability company (LLC) can be one of the most advantageous ways to form a new business. (Incorportate.com, 2014) This paper will discuss the nature of LLCs. This discussion will include the many advantages of an LLC. There are few disadvantages to forming and LLC; this will be reviewed in the nature portion of the paper. Additionally, the requirements for formation and operation of an LLC will be reviewed. Since LLC laws are not uniform from state to state, Ohio requirements will be referenced in the paper.
Nature
Forming a LLC is one of the most popular forms of business initiation. The most referenced benefit is the protection of personal assets provided by a LLC. A LLC combines the kind of asset protection corporations offer with the uncomplicated nature of a sole proprietorship or general partnership. (Incorporate.com, 2014) Not only does a LLC provide personal asset protection from lawsuits, it also can protect individual assets
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LLCs have a benefit known as pass-through taxation. This allows profits and losses to “pass through” the company to the personal tax filings of members. This benefit avoids the additional taxation a corporation can incur. (Incorporate.com, 2014) There are no residency requirements when forming a LLC. Members are not required to be permanent residents or U.S. citizens to participate. (Incoporate.com, 2014) A LLC also has flexible ownership advantages. Members can be added by purchasing equity in the company and there is no limit to the number of members. (Incorporate.com, 2014) Annual meetings and the filing of meeting minutes are not required by LLCs; therefore the company requires less record keeping than a corporation. Even though it may not be the right form for a business, the only major disadvantage to a LLC is the laws are no uniform from state to state. (Miller,