A limited liability company, or LLC, is a simple business structure that allows owners to pay business income on their individual taxes, but only extends liability as far as the business. In other words, owners personally pay taxes on the profits from the business, but if the business is named in a lawsuit, only the money in the business is at risk.
For example, a woman has been earning a small amount of money from a side business making pies. She decides to form an LLC and reports the income every year on her taxes. If someone threatens to sue her because they got sick eating one of her pies, she could potentially lose her business; however, her house, car, and personal property cannot be taken in payment.
Is an LLC a Smart Idea for My Business?
An LLC is one of the simplest business models a company can have. While it carries many advantages, there are also rules governing who may—and may not—benefit:
- Business size. LLCs have successfully been formed with only one owner, while others have two, ten, twenty or more. However, the more partners a business has, the harder it will be to designate duties under an LLC, making a corporation more preferable.
- Specific risks. While anyone who is concerned about personal exposure to business debts may form an LLC, some businesses are inherently at higher risk than others. For instance, owners who host their business in a office space may form an LLC as protection against slip-and-fall accidents on the property.
- Exclusions. Some businesses, such as banks and insurance companies, are prohibited from forming LLCs, so your eligibility will depend (to some extent) on the nature of your business.
Why Should I Hire an Attorney to Help Me Protect My Company?
While most states require only paperwork and filing fees to form an LLC in Florida, it takes much more than that to create a business. You will have to complete an operating agreement, choose a location, finance your operation, and designate duties for each member of the business. Before you start a business in Fort Myers, Sarasota, or anywhere else, click the contact link on this page to have Blackwell, Vishio & Fisher, PLLC examine your business plan and identify any potential legal problems.