Everything you need to form your own LLC! Forming a limited liability company gives you the best of two business worlds -- the informality and tax benefits of a partnership or sole proprietorship, and the personal protection from business debts of a corporation. Form Your Own Limited Liability Company provides you with the step-by-step instructions and forms you need to form an LLC in your state, without the expense of hiring a lawyer. Form are available in this pdf under Appendixes D LLC as tear out forms) This bestseller covers how to: -choose a valid LLC name -prepare and file articles of organization -set up a member-run or manager-run LLC -take care of ongoing legal and tax paperwork The 4th edition has been carefully revised and updated to reflect the latest IRS tax rules for LLCs, and now provides helpful checklists throughout. It also provides the most recent changes in all 50 states' laws. The forms you need are included as tear-outs and on CD-ROM. List of Forms IRS Form 8832, Entity Classification Election LLC Contact Letter Reservation of LLC Name Letter Articles of Organization Articles Filing Letter Operating Agreement for Member-Managed LLC Limited Liability Company Management Operating Agreement Minutes of Meeting Certification of Authority

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Overview of the LLC Introduction In this chapter, we briefly trace the history of the limited liability company (LLC), discuss its legal and tax characteristics and compare it to the traditional ways of organizing and doing business in the U.S. We'll delve more into the specific legal and tax characteristics of LLCs in the next two chapters. If you are familiar with LLCs. If you have followed the development of the LLC over the last few years and know its general legal and tax characteristics (or you simply want to look at the specifics of forming an LLC right now), you can skip the introductory material in this and the following two chapters. Move right ahead to Chapter 4, where you'll learn how to prepare LLC articles of organization. A. Development of the LLC The LLC is a relatively recent version of a type of business organization that has existed for years in other countries. It resembles the German GmbH, the French SARL and the South American Limitada forms of doing business, all of which allow small groups of individuals to enjoy limited personal liability while operating under partnership-type tax rules. The Wyoming legislature enacted the first state LLC legislation in 1977, eventually followed by Florida in 1982. In those early days, this new type of business entity was a risky proposition, because no one knew whether the IRS would tax an LLC as a corporation or a partnership. Because the idea behind forming an LLC -- to enjoy the tax status of a partnership without the legal liabilities -- seemed almost too good to be true, few business people were brave enough to avail themselves of this new business model without clarification from the IRS. Similarly, other states were unwilling to jump in with LLC legislation of their own. The first big break in the LLC stalemate came in 1988, when the IRS ruled on the tax treatment of Wyoming LLCs in Revenue Ruling 88-76. (A copy of this ruling is in Appendix B.) To the surprise of many tax practitioners, the IRS agreed that an LLC formed under the Wyoming statute was eligible for partnership tax status. The IRS's nod of approval created huge amounts of enthusiasm for LLCs, ultimately resulting in all states plus the District of Columbia passing LLC legislation. The second big break came on January 1, 1997 when the IRS threw out its old, and unnecessarily complicated, business entity tax classification regulations and agreed that LLCs should be taxed as partnerships (or sole proprietorships if they have one owner) without jumping through a number of technical hoops. Moreover, the IRS now lets an LLC elect corporate tax treatment if it wants it (by filing IRS Form 8832 -- see Chapter 3). B. LLCs at a Glance: The Best Thing Since Sliced Bread? In the U.S., the LLC stands as a unique alternative to five traditional legal and tax ways of doing business: sole proprietorships, general partnerships, limited partnerships, C (regular) corporations, and S corporations. Finally, you can establish a business entity with the limited liability of a corporation while retaining a level of tax simplicity that resembles a partnership. Here are the main attributes of LLCs. 1. Limited Liability Status The legal characteristic most interesting to business owners is undoubtedly the limited liability status of LLC owners. With the exception of corporate entities, the LLC is the only form of legal entity that lets all of its owners off the hook for business debts and other legal liabilities, such as court judgments and legal settlements obtained against the business. Another way of saying this is that an investor in an LLC normally has at risk only his or her share of capital paid into the business.

 

Everything you need to form your own LLC! Forming a limited liability company gives you the best of two business worlds -- the informality and tax benefits of a partnership or sole proprietorship, and the personal protection from business debts of a corporation.

Introduction 1. Overview of the LLC A. Development of the LLC B. LLCs at a Glance: The Best Thing Since Sliced Bread? C. Which Businesses Benefit as LLCs? D. Comparison of LLCs and Other Business Forms E. Business Entity Comparison Tables 2. Basic LLC Legalities A. Number of Members B. Paperwork Required to Set Up an LLC C. Responsibility for Managing an LLC D. Member and Manager Liability to Insiders and Outsiders E. Are LLC Membership Interests Considered Securities? 3. Tax Aspects of Forming an LLC A. Pass-Through Taxation B. How LLCs Report and Pay Federal Income Taxes C. LLCs and Self-Employment Taxes D. State Law and the Tax Treatment of LLCs E. Other LLC Formation Tax Considerations 4. How to Prepare LLC Articles of Organization A. Read State Sheets and Order LLC Materials B. Review and Organize Your State's LLC Information C. Choose a Name for Your LLC D. Check Your State's Procedures for Filing Articles E. Prepare LLC Articles of Organization F. Finalize and File Your Articles of Organization G. What to Do After Filing Articles of Organization 5. Prepare an LLC Operating Agreement for Your Member-Managed LLC A. Scope of Our Basic LLC Operating Agreements B. Customizing Your LLC Operating Agreement C. How to Prepare a Member Managed LLC Operating Agreement D. Distribute Copies of Your Operating Agreement 6. Prepare an LLC Operating Agreement for Managers A. Choosing a Manager-Managed LLC B. How to Prepare an LLC Management Operating Agreement C. Distribute Copies of Your Operating Agreement 7. After Forming Your LLC A. If You Converted an Existing Business to an LLC B. Basic Tax Forms and Formalities C. Ongoing LLC Legal Paperwork and Procedures D. Other Ongoing LLC Formalities 8. Lawyers, Tax Specialists and Legal Research A. Finding the Right Tax Advisor B. How to Find the Right Lawyer C. How to Do Your Own Legal Research Appendix A: State Sheets Appendix B: Tax Regulations Revenue Ruling 88-76 IRS "Check-the-Box" Tax Classification Regulations Appendix C: How to Use the CD-ROM Appendix D: LLC Forms IRS Form 8832, Entity Classification Election LLC Contact Letter Reservation of LLC Name Letter Articles of Organization Articles Filing Letter Operating Agreement for Member-Managed Limited Liability Company Limited Liability Company Management Operating Agreement Minutes of Meeting Certification of Authority

"In typical straightforward Nolo fashion, this book explains everything from choosing a name to maintaining the LLC's legal and tax status."

 

"Good news from the IRS... you, too, can be an LLC. The advantage: profits are taxed just once, like a partnership, while personal liability is limited, like a corporation. [And now you can do it yourself with] Nolo's book on LLCs."

 

"Armed with this book, entrepreneurs... can take advantage of the unique tax and legal benefits of the LLC for less than the cost of 10 minutes of their own lawyer’s time."

 

Anthony Mancuso, Attorney

Attorney Anthony Mancuso is a corporations expert and author of Nolo’s bestselling corporate law series. He is the author of How to Form Your Own Corporation for California, New York, Florida and Texas; How to Form a Nonprofit Corporation (National and California Editions); The Corporate Minutes Book; California Incorporator (software) and co-author of Nolo’s Partnership Maker (software) and How to Create a Buy-Sell Agreement & Control the Destiny of Your Small Business. His books and software have shown over a quarter of a million businesses and organizations how to incorporate.

 

Form Your Own Limited Liability Company by Anthony Mancuso
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