When forming a business in the United States you have the choice between a few different structures. Limited liability companies (LLCs) offer limited liability protection to their owners. The owners will not be considered liable for the company’s debts, or should the company be sued. They are hybrid entities that offer characteristics of a corporation as well as of a partnership or sole proprietorship.
When you form an LLC, you are creating a new business entity. It is a new entity that is separate from the owners and can even enter into contracts or go into debt on its own. Because of this, it offers the owners limited liability protection.
If an LLC cannot pay its debts, then the creditors are unable to go after the owner’s assets or bank accounts. Rather, LLC’s creditors can only go after the bank account and other assets belonging to the LLC. This means that you will only be at risk for what you have put into the company.
It is good to note that an LLC cannot protect you against being sued for your own negligence.
Most business owners form an LLC to protect their assets. They don’t want to be held liable personally for something that happens on the clock. If you want to enhance your LLC’s asset protection, consider these 5 tips.
When forming an LLC there are a few things that are required. First off, it is important to be aware of the state laws in Delaware, and the fees that are required in forming an LLC. Not only is there an initial filing fee of $90, but there is an annual fee of $300. Working with a lawyer can help to ensure that you are in compliance with all state laws.
To form an LLC you will need to choose a name that is unique in the state of Delaware. Then you should hire a registered agent who is available to accept service of process. They will need to have a physical address in the state of Delaware. This is to ensure that they can accept a lawsuit in a prompt manner if your LLC is sued.
It is also important to file the articles of organization that establishes the LLC (this is submitted along with the $90 filing fee). An operating agreement should be drafted, which will outline the ownership of your LLC and operating procedures. It is important because the operating agreement reduces the risk should a future conflict arise.
One of the last steps in forming an LLC is to obtain an EIN, This is similar to a social security number, but for your business. It will help you to open a business bank account, and hire employees. Hiring a lawyer can help with this process and ensure every step of the way is done in accordance with the law.