What does LLC stand for? Get to know the straight answers!
For some people getting the answer to the question ‘what does LLC stand for,’ is a daunting task. Sometimes, this is alternatively known as (in acronym) the “LLC,” “L.L.C.,” or “Ltd. Co.” There are some instances when this is known as something else in informal terms. But the truth is that, LLC formally stands for “Limited Liability Company.” But in general practice, people who own the LLC are normally known as members. That’s pretty much not like the corporation, where the owners are known as the shareholders. For forming an LLC, owners of the business venture need to file a special certificate of formation. This needs to be done with the respective state’s Secretary of State. In general, this calls for some hundred bucks if you wish to file the certificate. There are some states where, it might be essential that you also register your LLC with the particular county where your business is based.
Those who’re asking ‘what does LLC stand for,’ should know the limitations that the LLC stand for. The LLC happens to be a newer kind of business structure. Did you know that the IRS does not recognize LLCs for tax purposes? Accordingly, the members or owner of the LLC needs to decide whether or not to file it as a typical sole proprietorship company or a common partnership company or as a corporation. Did you know that the kind of entity chosen by the members could significantly affect the manner in which the underlying business gets taxed? This is the reason, it is so important that you consult a lawyer as well as a veteran accountant for deciding on the option best suited to your LLC.
Fortunately, there are different kind of advantages associated with LLCs. Among the primary reasons for which business owners form business ventures as LLCs is that, they get to enjoy the freedom of limited liabilities. To illustrate, should their business ends up facing a lawsuit or some other type of legal obligation, the fact that the business has an LLC structure will completely protect the assents of the members. Each and every member just stands to forego the share she or he had in the LLC. As opposed to that, the personal assents of a sole proprietor remain at risk as the company starts to face some legal troubles and liabilities. This way, the structure of the LLC business provides the members or owners with the invaluable asset protection, even though these members have chosen a different structure to build and run the company.
As you are now well familiarized with the positive sides of LLCs, as you look up the answer to the question ‘what does LLC stand for,’ you should also take a look at the downsides as well. For a typical LLC to make the most out of the limited liability structure, it essentially has to comprise multiple members. Or else, the IRS will start to regard this LLC as merely a sole proprietorship that is subject to taxation. In such cases, the assets belonging to the single-member of an LLC remains at steep risk when the business is face with any kind of legal or liability problems.