The main features of a Limited Liability Company are:
1. Limited liability: The owners of an LLC, known as members, have limited liability for the debts of the business, meaning that they are not personally responsible for any losses incurred by the LLC. They are only responsible for the amount of money or property that they invest in the company. They are only liable for any wrongful actions that they personally carry out.
2. Pass-through taxation: The LLC itself is not taxed on its profits, but the members are taxed on their share of the profits according to their tax residence status. The members can choose to be taxed as a sole proprietorship, a partnership, or a corporation, depending on their preferences and circumstances. This can help to reduce the overall tax burden on the business, as the members can deduct their expenses and losses from their taxable income.
3. Flexible management: The members of an LLC can decide how to manage and run the business among themselves, without any fixed rules or ratios. They can also decide how much capital to contribute and withdraw from the business, as long as they maintain at least one member at all times.
4. Simplified administration: The LLC does not have to comply with some of the formalities and regulations that apply to corporations, such as holding annual general meetings, appointing directors and shareholders, or issuing shares. The LLC only has to file its articles of organization with the state where it is formed and pay annual fees to keep its status. The LLC may also have to file its annual report and tax return with the IRS and the state tax authority.
5. State-specific rules: The LLC is governed by the laws and regulations of the state where it is formed, which may vary from state to state. Some states may have different requirements or restrictions on the formation, operation, or dissolution of an LLC.
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You must follow these steps to form a business in the USA:
1. Choose a name: Your company name must be unique and not too similar to another registered LLC name. Your name must also end with "Limited Liability Company" or "LLC" or a similar abbreviation.
2. Choose a registered agent: A registered agent is a person or entity that agrees to receive legal notices and documents on behalf of your LLC. The registered agent must have a physical address in your state and be available during normal business hours. You can choose a member of your LLC, a friend, a relative, or a professional service as your registered agent.
3. File articles of organization: Articles of organization are the official documents that create your LLC and register it with your state. You will need to provide information such as your LLC name, address, registered agent, purpose, duration, and members.
4. Create an operating agreement: An operating agreement is a written document that outlines how your LLC will be run.
5. Obtain an EIN: An EIN (Employer Identification Number) is a unique nine-digit number that identifies your LLC for tax purposes. You can get an EIN from your a company formation agent itself. You will need an EIN if you want to open a bank account for your LLC, hire employees, or file taxes for your LLC.
6. Open a bank account: To keep your personal and business finances separate and protect your limited liability, you should open a dedicated bank account for your LLC. You will need to provide your EIN, articles of organization, operating agreement, and personal identification to open an account. You can also apply for a business credit card or loan if you need funding for your LLC.
7. Comply with tax and legal requirements: Depending on the nature and location of your business, you may have to comply with various tax and legal requirements at the federal, state, and local levels. You may have to register for sales tax, obtain licenses and permits, file annual reports, pay income tax, self-employment tax, employment tax, etc.
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Registered accounts gets these benefits:
- Buy various types of services