Important LLC Considerations
Limited Liability Companies (“LLCs”) are the business structure of choice for small businesses. They are simpler than corporations and offer more protection than sole proprietorships.
Benefits of an LLC
Shield Your Assets: An LLC shields your personal money and assets from business debts and creditors if the LLC is maintained correctly.
Simplified Taxes: Profits and losses flow directly to your personal tax return, avoiding double taxation common with corporations.
Flexible Profit Sharing: You can tailor your LLC agreement to your specific needs to dictate how profits and losses are shared among members (always confer with a CPA).
Ideal for Startups: LLCs are known for their ease of formation and maintenance. Compared to corporations, they require less paperwork and ongoing formalities.
Maintaining an LLC: Actionable Steps
Consult an Expert When Considering New Members: Adding members involves legal and tax implications. Get professional advice before adding new members to avoid unwanted tax burdens or unintended changes in your ownership structure.
Seek Guidance If you Wish to Transfer Your Ownership: Transferring ownership interest can also have tax consequences. Talk to a tax advisor and lawyer to ensure everything is done properly and there are no unexpected tax burdens.
Business Accounts: Ensure you use a separate business bank account and business credit card for all business. Do not use business accounts for personal expenditures.
Use of Business Name: Always use your LLC name on business materials, including contracts, letterhead, emails, etc.
Sign in Business Capacity: Always sign contracts, checks, loans, agreements of any kind in the business name and with authorized signer's title (e.g., "By: John Doe, Manager").
New Maintenance Requirement
The Corporate Transparency Act (CTA) requires all LLCs to register beneficial owners with the FinCEN website (https://fincen.gov/boi). LLC’s in existence prior to January 1, 2024, have until January 1, 2025, to comply. LLC’s formed January 1, 2024 or later must register within 90 days of formation. Fines and penalties can be imposed if your business is not compliant. Stay informed about any updates to these regulations.
Need Help Maintaining Your LLC?
We understand every business is unique and we can help to ensure your business stays complaint to keep its liability protections.
This information provides a general overview, but it is not a substitute for legal advice. Consulting a business attorney is highly recommended to ensure you are compliant with the law and maximize the benefits of your LLC.
You can contact us here to schedule a consultation.
****This summary provides a concise overview of limited liability companies for educational purposes only, and is not to be construed as legal advice for your specific situation. Please contact us if you have questions or need assistance.
