Choosing a Business Entity: Limited Liability Company (LLC)
The limited liability company is a hybrid type of business structure. It contains elements of both a traditional partnership and a corporation. The limited liability company form of business structure is relatively new. Only in the last few years has it become available as a form of business in all 50 states and Washington D.C. Its uniqueness is that it offers the limited personal liability of a corporation and the tax benefits of a partnership. A limited liability company consists of one or more members/owners who actively manage the business of the limited liability company. There may also be nonmember managers employed to handle the business.
In as much as the business form is still similar to a partnership in operation, there is still a potential for conflict among the members/owners of a limited liability company. Limited liability companies are formed according to individual state law, generally by filing formal Articles of Organization of a Limited Liability Company with the proper state authorities in the state of formation. Limited liability companies are, generally, a more complex form of business operation than either the sole proprietorship or the standard partnership. They are subject to more paperwork requirements than a simple partnership but somewhat less than a corporation. Limited liability companies are also subject to far more state regulations regarding both their formation and their operation than either a sole proprietorship or a partnership. In all states, they are also required to pay fees for beginning the company, and in some states, annual franchise fees of often hundreds of dollars are assessed for the right to operate as a limited liability company. Similar to traditional partnerships, the limited liability company has an inherent lack of continuity. In recent years, however, an increasing number of states have allowed limited liability companies to exist for a perpetual duration, as may corporations. Even if the duration of a limited liability company is perpetual, however, there may be difficulties if the sole member of a one-member limited liability company becomes disabled or dies. These problems can be overcome to some extent by providing, in the Articles of Organization of the limited liability company, for an immediate reorganization of the limited liability company with the deceased member’s heirs or estate becoming members of the company. In addition, similar to partnerships, it may be difficult to sell or transfer ownership interests in a limited liability company.
The members/owners in such a business enjoy a limited liability, similar to that of a shareholder in a corporation. In general, their risk is limited to the amount of their investment in the limited liability company. Since none of the members will have personal liability and may not necessarily be required to personally perform any tasks of management, it is easier to attract investors to the limited liability company form of business than to a traditional partnership. The members will share in the potential profits and in the tax deductions of the limited liability company, but in fewer of the financial risks involved. Since the limited liability company is generally taxed as a partnership, the profits and losses of the company pass directly to each member and are taxed only at the individual level. A further advantage of this type of business structure is that it offers a relatively flexible management structure. The company may be managed either by members (owners) themselves or by managers who may or may not be members. Thus, depending on needs or desires, the limited liability company can be a hands-on, owner-managed company or a relatively hands-off operation for its members/owners where hired managers actually operate the company. A final advantage is that limited liability companies are allowed more flexibility than corporations in how profits and losses are actually allocated to the members/owners. Thus, one member/owner may be allocated 50 percent of the profits (or losses) even though that member/owner only contributed 10 percent of the capital to start the company. “Choosing a Business Entity” © Nova Publishing Company, 2005
Running an LLC
Running an LLC will mean that you have to encounter many of the various tax forms that any business would have to encounter – filing the right paperwork to hire people, file taxes, and generally run business as any other company would. But if you want to define specific forms relating to an LLC, it’s important that we do so now. Many of these issues relate to tax forms, and the good news about LLCs is that there’s a great amount of flexibility in the way you file taxes. For example, if you are a sole proprietor LLC, you can file taxes essentially as a sole proprietor, even if you have to report that your income goes to your LLC. These tax forms will not be very different from the tax forms you currently file now if you’re already a sole proprietorship.
Great Credit Repair Tips From Experienced People
A lot of us made the mistake long ago of leaping before looking. We decided that it was okay to start a line of credit, and many of us really didn't focus on whether or not we had the available means to repay the debt. Now there are countless people out there dealing with bad credit, all desperate to repair their lives. Here's some tips on how you can get started.
Limit applications for new credit. Every new application you submit will generate a "hard" inquiry on your credit report. These not only slightly lower your credit score, but also cause lenders to perceive you as a credit risk because you might be trying to open multiple accounts at once. Instead, make informal inquiries about rates and only submit formal applications once you have a short list.
Refrain from applying for too many credit cards. When you own too many cards, you may find it difficult to keep track of them. You also run the risk of overspending. Small charges on every card can add up to a big liability by the end of the month. You really only need a couple of credit cards, from major issuers, for most purchases.
Pay your bills on time. It is the cardinal rule of good credit, and credit repair. The majority of your score and your credit is based off of how you pay your obligations. If they are paid on time, every time, then you will have no where to go but up.
For the best credit score possible, you should apply for multiple cards and make sure you do not use more than 20% of the available balance on each card. Pay off all your cards before applying for a new one. By not going over 20%, you are not damaging your credit and not raising the interest rate.Set up a Cash Line for your eBay Business when You need it! Get up to $100K in 7 minutes with Kabbage. Sign up now!
An important tip to consider when working to repair your credit is the fact that each of the three credit reporting agencies will most likely have a different score for you. This is important to know because each company has a different report and each has a different model that they use to calculate your score.
Avoid credit schemes that will get you in trouble. You should steer clear of internet programs that show you how to clear your credit. Do things like this can get you into big trouble with the law. Legal repercussions will cost you a lot of money, and you could go to jail.
Let the Better Business Bureau be your guide when searching for credit repair companies. Fortunately, many people have filed complaints against companies who charge fees for services that they cannot render. If a company's offers or promises seem too good to be true, beware of their services. Call the BBB before you committ to something that is not worthwhile.
If you need to repair your credit, the first thing you must do is obtain a copy of your credit report from the big three reporting agencies: Transunion, Experian, and Equifax. Because you have to know what is being reported, make sure it is accurate, and then, devise a plan to improve your credit.
To ensure that your credit history is accurate and up to date obtain regular credit reports and carefully inspect each one. An error on your credit report can drastically affect your ability to obtain loans. There is no reason for you to suffer for a mistake that you did not make.
If you need a credit agency to help you resolve your credit problems, research the agency before you sign on with it. Scams in credit repair are widespread, and many unsuspecting people have become victims of these scams. To prevent this from happening to you, get as much information as you can about the reputation of the agency.
When on the road to credit repair, pay all of your bills on time. Credit scores base a lot of weight on paying back your debts on time. Make sure you get the payment to your creditor before the due date. When you start paying on time you will start to see your score rise.
Bad credit can happen to anyone in this day and age, so don't think that you're in uncharted territory. The important thing to remember is that you can get your head above water if you apply yourself. Use the tips provided here to assist you and that bad credit rating will be a thing of the past.