Q. What is a limited liability company (LLC)?
A. The LLC is a business entity that offers limited liability protection and pass-through taxation. As with corporations,the LLC legally exists as a separate entity from its owners. Therefore, the owners cannot typically be held personally responsible for the debts and liabilities of the LLC.
The LLC allows for pass-through taxation, as its income is not taxed at the entity level; however, a tax return for the LLC must be completed. Any income or loss of the LLC as shown on this return is passed through to the owner(s). The owners, also called members, must then report the income or loss on their personal tax returns and pay any necessary tax.

Q. What paperwork is required to form a limited liability company (LLC)?
A. Articles of organization, sometimes also called a certificate of organization, must be prepared and filed with the state, and filing fees along with any applicable initial franchise taxes or other initial fees must be paid.
If your LLC is formed through LegalCPU.Com, INC., all you need to do is complete our simple order form. We will prepare and file your articles of organization and pay the initial filing fees.

Q. Who can form a limited liability company (LLC)?
A. There are no restrictions as to who can form an LLC. Anyone who prepares and files the articles of organization or certificate of organization with the appropriate state agency is eligible to form an LLC.

Q. Do I need an attorney to form a limited liability company (LLC)?
A. No, an attorney is not a legal requirement. You can prepare and file the articles of organization yourself; however, you should understand the requirements of your intended state of formation.
You can use LegalCPU.Com, INC. service to form your LLC and save money on attorney's fees. However, if you are unsure of what entity type would be most beneficial to your business, consult an attorney or accountant.

Q. What should I name my limited liability company (LLC)?
A. Choose the name of your LLC carefully. It is very important that your name portray the image you want for your new company. Legally, the name you select must not be "deceptively similar" to any existing company or must be "distinguishable on the record" of your state.
It is possible that the name you select will not be available; therefore, LegalCPU.Com, INC. asks for a second choice on the LLC order form.
Additionally, most states require that the name you select show your business is an LLC, by including the words "Limited Liability Company" or the abbreviation of "LLC."

Q. How many people are needed to form a limited liability company (LLC)?
A. The IRS does allow one member LLCs to qualify for pass-through tax treatment; however, taxation of the one person LLCs at the state level may be different.

Q. How is a limited liability company (LLC) taxed?
A. A state-registered LLC can be taxed for federal income tax purposes as a partnership. Under the check-the-box rules included on IRS Form SS-4, an LLC can elect partnership status to avoid taxation at the entity level as an "association taxed as a corporation." If an LLC is not taxed as a partnership, it will be taxed at the entity level similar to a standard or C corporation.
The state income tax treatment of LLC profits and losses may or may not mirror the IRS tax treatment depending on the state. For specific information on your state's rules, visit your state's website.
Please note that California LLCs are subject to an annual minimum franchise tax of $800 per year. The first payment must be made within 3 months of forming your LLC. The state of California does send a bill to help you to remember to make this payment.

Q. What is the organizational structure of a limited liability company (LLC)?
A. An LLC is owned by its members. This is the same as partners in a partnership or shareholders in a corporation, depending on how the LLC is managed. A member will more closely resemble shareholders if the LLC has a manager or managers, because then the members will not participate in management. If the LLC does not utilize managers, then the members will closely resemble partners because they will have a direct say in the decision making of the company.
A member's ownership of an LLC is represented by membership interest, just as partners have interest in a partnership and shareholders have stock in a corporation.

Q. How is a limited liability company (LLC) managed?
A. An LLC may be managed by its members (owners) or by selected managers.
If the LLC is to be managed by its members, it operates like a partnership. Each member has an equal say in the decision making process of the company.
If the members choose, they may elect a manager or managers to act in a capacity similar to a corporation's board of directors. These managers are in charge of the affairs of the LLC.
Member management is the normal default rule of state law. If managers are not selected in the articles of organization, the members will direct the affairs of the LLC.

Q. Should I choose a limited liability company (LLC) or an S corporation?
A. While the S corporation and LLC both have pass-through taxation, the S corporation lacks the flexibility of an LLC in allocating income to the owners.
An LLC may offer several classes of membership interest while an S corporation may only have one class of stock.
Any number of individuals or entities may own interests in an LLC. However, ownership interest in an S corporation is limited to no more than 100 shareholders. Also, S corporations cannot be owned by C corporations, other S corporations, many trusts, LLCs, partnerships or nonresident aliens. LLCs are allowed to have subsidiaries without restriction.

Q. What is a publication requirement?
A. A few states require notice to be published in a newspaper that a limited liability company (LLC) has been formed. States with this requirement for LLCs include: Arizona, Nebraska and New York. The service performed by LegalCPU.Com, INC.  includes the publication requirement for each of the above states except for New York limited liability entities (LLC, LP, LLP). In these instances, the publication requirement can be met using LegalCPU.Com, INC. ‘s publication service which can be added to a formation order or purchased independently.

Q. How do I get started setting up a limited liability company (LLC)?
A. After you decide to form an LLC, articles of organization must be filed with that state and initial fees must be paid. If you choose LegalCPU.Com, INC. to form your LLC, we will complete these administrative tasks quickly and effectively.
After your articles of organization are filed, your LLC should have an organizational meeting where an operating agreement is adopted, interest certificates are distributed to members and other preliminary matters are completed.
LegalCPU.Com, INC. LLC package includes all the information and paperwork to make this process easier.

Q. How soon will I receive my documents?
A. It is important to note that the 24 or 48 hour filing time is for the formation only. It typically takes longer for the states to produce the filed documents. Once LegalCPU.Com, INC. receives your documents from the state, we will ship them to you via Overnight delivery. This means you should have your documents in hand anywhere from just a few days to one week after filing.