Frequently Asked Questions (FAQs) for an LLC
Below are the most common questions we get regarding LLCs. Please remember that these are general in nature and not to be construed as legal advice.
What is an LLC?
By definition, a limited liability company is a type of legal entity that limits the liability of its owners, thus blending the elements of partnerships and corporate structures. LLCs do not need to be organized for profit and are allowed in most states.
Does the state require a signature to file an LLC?
We can sign as organizer as part of our service, thus eliminating the need for your signature. If you upload the document to us, please sign it prior to uploading. Some states do require your signature on the formation documents. We will notify you if we need a signature or any additional information.
Which state is the best state to form an LLC?
This question is better answered by your CPA or attorney. We can say that most small businesses start out with their home state (where the company is located). Other popular states are Delaware and Nevada, due to their “corporate friendly” laws. Keep in mind that if you form in another state other than your home state, you would then be required to “qualify” to do business in your home state.
Do I need to register or “qualify” to do business in every state in which I do business?
To operate your business in multiple states will cost you both initially and annually. Depending on your type of business, you may need to qualify in every state where you transact business.
Can any type of business form as an LLC?
No, some industry types cannot be formed as an LLC. Make sure to verify that your State allows the use of an LLC for your industry.
In which state do I file taxes upon forming an LLC?
Most states have annual filing requirements, including licenses or permits that may be required based on your industry. We strongly advise you to seek the advice of a tax professional to comply with all state tax laws and regulations.
What are the most common reasons of choosing an LLC?
Pass-through taxation is one of the most common reasons. It means that you can report your share of the company's profit or loss on your individual tax returns. The IRS does not tax your LLC separately. Again, contact a tax professional for specific details.
What is pass-through taxation as it relates to multiple owners?
This means that each member of an LLC reports their share of profit and loss in the company on their individual tax returns, and the IRS does not assess a tax on the LLC itself. This avoids "double taxation" of general corporations, where profits are taxed at the corporate level and also at the shareholder level.
What is a Series LLC and what states allow it?
A Series LLC is a limited liability company with more than one series of members, managers, or LLC interest having separate rights, powers, or duties with respect to specified property and/or obligations of the LLC. Any series may also have a separate business purpose. Delaware, Illinois, Iowa, Nevada, Oklahoma, Tennessee, and Utah all allow a Series LLC.
Below are the general differences between the two corporate tax structures How is a corporation taxed?