Limited Liability Corporation

When you are considering what route to take your business down, you should know about the Limited Liability Company (LLC) option. 

About LLCs

If you don’t want to have to take the larger step of becoming a full corporation, a LLC is a more manageable version of this plan. While corporations have to file corporate business taxes at the end of the year, with a LLC you can still file the taxes for your company on your personal tax return.  At the same time, an LLC offers many of the important liability protections that are afforded to corporations.

Instead of being called partners or shareholders in the business, the owners of an LLC are called members.  There may also be one or more managers.

 
Liability Protection

When you create an LLC, you are limiting your own personal liability in the operation of your business.  The law treats an LLC as an independent legal entity. That means if there is legal action, only the LLC's assets are exposed to that action.  This is especially important if you have a lot of personal assets or are running a business that runs with a high risk of liability.  An example of this is owning or managing rental real estate.

This protection is not just good against lawsuits, but may also protect you from financial actions. If your LLC runs up a lot of debt and falls on hard times, only the LLC's assets can be touched by the creditors and lawyers that are looking for restitution. This is true unless you have signed a personal guarantee. If you instead just had your business set up as a sole proprietorship, your personal assets are also on the line if your business fails.

Flexibility in Management

Corporations have a very strict structure. When business meetings are held and actions taken there must be by law, minutes of the meetings as well as a written record of the resolution of any issues.  LLC operations don't require this type of paperwork, and therefore are less of an operational hassle.

Establishing an LLC

There are a number of important steps to take to properly establish an LLC. There must be properly drafted Certificate of Formation, a Member Operating Agreements, outlining each member’s duties and how profits and losses will be divided. There are also many additional tax considerations.

The best way to make sure you have all the proper paperwork and you are armed with knowledge of what it takes to successfully operate an LLC is to contact our experienced attorneys today. The Austin Business Law lawyers at the Law Office of Willie & Dasher are highly experienced in the area of Business Law, and can help get your business off to the best possible start!