It used to be if entrepreneurs and business owners kept the flexibility of working as a sole proprietorship or partnership, they risked their personal assets if their business ever fell into debt. Unfortunately, if they formed a corporation to limit their liability, they gave up the flexibility that made their business successful. Many states now allow limited liability companies (LLCs) which combine the best of both worlds offering enhanced risk resiliency while maintaining a relatively simple and flexible structure.
A Minnesota limited liability company lawyer could help you decide if an LLC is right for you, reform your company into this structure, and provide ongoing support to keep your business up and running. A business attorney could help you create a strategy to structure your business in the best way for your bottom line.
Benefits of Forming an LLC in Bloomington
How is Liability by an LLC?
Similar to a corporation, an LLC limits the personal liability of members. Ordinarily, the personal assets of business owners such as sole proprietors or partners can be targeted by creditors of the business. LLCs, on the other hand, are separate legal entities meaning creditors cannot go after the personal assets of members for the debts of the LLC. An LLC provides the same security to business owners of a corporation without having to comply with some of the additional legal requirements placed on corporations.
What Makes Limited Liability Companies More Flexible Than Other Business Types?
The tax benefits of an LLC are straightforward. The LLC is a pass-through entity, meaning the profits and losses are passed to members who then file individually. In this way, the LLC avoids the corporate tax rate and a second round of tax when dividends are paid out to the shareholders of a corporation. Although an S corporation also offers pass-through status, an S corporation limits the number of shareholders. An LLC is not limited to the number of members that can take advantage of pass-through status.
Unlike corporations that are required to have a board of directors overseeing the company, LLCs provide owners with more choices about how their business is structured. This could give owners a more flexible structure that affords them many of the benefits of a sole proprietorship or a partnership. LLCs are also not required to distribute profits equally or according to ownership percentages giving owners even further options.
Legal Requirements to Form an LLC
A limited liability company is authorized through state statute, meaning you have some choices as to where you want to form an LLC. Every state varies, but the following are typical requirements of an LLC:
- Business name
- Articles of Organization to create the LLC
- Licenses and permits to ensure local and state legal compliance
- Statement of Information to give an address and name the owners
- Tax forms
Although most of these requirements are straightforward, a Minnesota limited liability lawyer could help ensure that everything is correct, leaving nothing up to chance for your business.
Find out what a Minnesota Limited Liability Company Lawyer Can Do for You
Forming an LLC can be a tricky endeavor, but potentially worthwhile for your business. A Bloomington limited liability company lawyer can help you through every step of the process to ensure your business and personal assets are protected.
Whether you need help drafting the requirement documents, determining which state is your best option to select, or have general questions about the process, a Minnesota LLC attorney can help your business move forward. Call today to get started.