This relatively new business structure can be formed in any of the 50 states. A limited liability company (LLC) has the limited liability of a corporation but the flexibility and tax status of a partnership. That makes it an up-and-comer in business circles.
A filing must be made with the appropriate state authorities. Usually this consists of the articles of organization and the operating agreement. It is important to dot all the “i’s” and cross all the “t’s” when creating this structure. Therefore, you should retain an attorney who understands your state’s specific laws.
In fact, tax liability is the same as that of a partnership. The IRS has, for the most part, accepted the LLC, but be sure to ask if the law in your state has been approved. You report profits and losses on a personal, rather than corporate, tax return.
As the name implies, liability is limited to the assets of the LLC.
The restrictions on securing capital are the same as those of a general partnership. Your revenue options are limited because you cannot raise money through shareholders.
You will have to engage in succession planning, as you do in a general partnership (see above).