LLC Formation Lawyer in Minnesota Helping Clients Start With a Strong Foundation
An LLC, or limited liability company, is a popular business type for a variety of reasons, including the protections it creates for owners. However, every business structure comes with its own set of pros and cons, and it’s critical to choose one that supports your goals now and in the future.
Working with experienced business attorneys ensures you consider all the right details when planning for the future of your company. If you’re working on launching a new business endeavor, reach out to TVA Law Office to find out how we can help you start with a strong foundation.
What Is a Limited Liability Company?
A limited liability company, or LLC, is a type of business structure that creates a barrier between the owner as a person and the company as an entity.
Other types of business structures that are popular include:
- Sole proprietorship
- S Corporation
A company formed as an LLC falls right in the middle of this list when it comes to flexibility of ownership, protection for owners, and costs associated with setup. That’s why it’s one of the most popular choices for small and mid-size businesses alike.
What Are the Benefits of Establishing Limited Liability Companies?
While there’s no one business structure that fits every company perfectly, limited liability companies do enjoy a number of important benefits. Some of the reasons you might choose an LLC over a corporation or sole proprietorship include:
- Limited personal liability. One of the biggest advantages of an LLC is that it limits your personal liability as an owner. The business is a separate entity, and in many cases, if it is sued or owes a debt, that burden doesn’t automatically fall on you. That’s in contrast to a sole proprietorship, where you and the business are synonymous and hold the same liability.
- Reduced paperwork requirements. When compared with corporations, LLCs tend to require less paperwork to set up. They may also require less complex annual reporting, which can reduce overall management expenses.
- More flexible tax options. LLCs may be able to take advantage of federal tax structures that work best for their owners, whereas other types of businesses have more locked-in income and tax rules. Business taxes are a complex topic, and it’s always worth discussing these matters with a professional such as a business law attorney, before you make any decisions about company formation.
- Increased ownership options. When comparing LLCs and S corporations, LLCs come out ahead on ownership flexibility. S corps are limited to 100 owners, whereas you can have unlimited owners for an LLC. Other LLCs, partnerships, and corporations can also own LLCs.
- Flexible holding options. LLCs can be used to hold alternative assets, such as intellectual property.
What Is an Operating Agreement?
An operating agreement provides a written set of rules for the governance of an LLC. Operating agreements help ensure the liability protection of an LLC and put all the agreements between members of the LLC into writing. This is essential to avoiding arguments and even legal battles between members in the future.
How Do I Form an LLC?
Business formation for an LLC involves choosing a name and filing some paperwork. You may also have to pay a filing fee when you register your limited liability company. Find out more about the steps below.
Choose a Business Name and Registered Agent
Within reason, you can name your company what you want as long as the name isn’t already taken. However, you do have to include the phrase “limited liability company” or the acronym “LLC” in the official name of the company. Otherwise, it won’t be accepted by the Secretary of State.
You must also name a registered agent to receive legal correspondence on your behalf. You can name yourself, or if you’re working with experienced business attorneys, your lawyer.
File Articles of Organization
Your business isn’t formed until you file Articles of Organization. This document must be filed with the Minnesota Secretary of State and include information such as the business name, contact information for the registered agent, and contact information for the person organizing the company. This is where you’ll have to pay a filing fee.
Create an Operating Agreement
While the state won’t come looking for an operating agreement, and your business is established without one, it’s a good idea to create this contract. This is especially true if you are starting an LLC with other members, as the operating agreement can protect you all.
Working with business attorneys who can provide legal advice throughout this process can enhance your chances of a positive outcome with the business formation. Setting up a limited liability company is only the first step in a long journey to success and growth. Starting with the right legal foundation can make the entire journey easier.