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| Limited Liability Company (LLC). |
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| Limited Liability Company (LLC)
There is no stigma attached to being an LLC rather than an Inc. Chrysler is an LLC. YouTube registered was acquired by Google for $1.65 billion in October 2006 and remains YouTube, LLC.
It may be of interest to know in Florida, you may choose to have a Limited Liability Company (LLC) treated for tax purposes as one or more individuals - and there is no state personal income tax in Florida.
A corporation will cost you more to establish and operate than an LLC and there are some overheads in terms of administration, meetings and reporting. An LLC is simpler to operate, offers potential individual tax-savings and, should you so wish, an easy migration path to corporation status as and when it is beneficial.
Some states offer financial incentives to start-ups, but ask yourself "Why?" and look for the true, total cost of location, including travel time and cost as well as staff recruitment.
Some states, including Arizona and New York, require the extra step of publishing a statement in a local newspaper regarding the formation of your LLC.
LLC owners report their share of business profit and loss on their personal tax returns, similar to tax reporting for a general partnership. (There is no personal state income tax in Florida.)
Forming an LLC can help you separate yourself from your business, protecting your personal assets in the event of a judgment against the company. There is no limit to the number of owners of an LLC and no requirement to hold annual meetings or record minutes.
The Articles of Organization
The Articles of Organization is a document that legitimizes your LLC and includes information such as your business's name, address, the names of its members, and if necessary, the name and address of a Registered Agent who is authorized to accept legal documents on behalf of the business. The form is provided by and filed with your state's LLC office, typically the Secretary of State. There is usually an associated filing fee, but that varies with each state, and is usually tax-deductible.
The Operating Agreement
The Operating Agreement structures the LLC's financial and functional decisions. The purpose of an operating agreement is to govern the internal operations of the business in a way that suits the needs of its members (owners). Typically, an operating agreement includes a breakdown of members' ownership percentages along with each member's responsibilities, powers, and duties; an explanation of how of profits/losses will be distributed; a description of how and when meetings will be held; and the procedures for buying out/transferring interest when members leave the LLC. Once the document is signed by the members, it acts as an official contract binding them to its terms. Operating agreements are not required by every state, however it is widely recommended to create one.
LLC Owners (Members)
LLC owners are referred to as members. A member may be an individual or a separate legal entity. In the State of Florida, an LLC can exist with one member. Your UK company can be the sole member.
LLC Managers
LLCs can be "member-managed" or "manager-managed." In a "member-managed" LLC, managerial control and binding authority are vested in all of the members of the LLC. Thus, all members are active participants in the management of their business.
"Manager-managed" is where one or more managers are appointed to take responsibility for managing the LLC. Managers may or may not be members of the LLC. The non-managing members simply sit back and share in the LLC profits. In a manager-managed LLC, only the appointed managers get to make management decisions and act as agents of the LLC.
Selecting Officers
You are not required to select officers at the time your LLC is organized. If you choose to defer the appointment of officers, the LLC's operating agreement will simply state that they will be appointed by the manager.
Appointed officers can include a chairman of the board, president, a vice president, a treasurer and secretary, as well as any other officers the manager deems appropriate. In the state of Florida, one person can serve as president, secretary and treasurer.
Choosing a Fiscal Year End
One of the required forms you will receive with your LLC paperwork is an Application for Employer Identification Number (EIN). This form asks for the date of your fiscal year end. For most businesses, the fiscal year starts January 1 and ends December 31; however, you may want to use the same fiscal year end of your UK company, if it is other than December 31, or another date.
The Internal Revenue Service (IRS) allows a company to change their year end date anytime before filing its first tax return. This means you will have time to discuss with your US accountant any questions you might have about the advantages of choosing one fiscal year end date over another, after you file this application. (Note: Once your first tax return is filed, the fiscal year end date is set in stone.)
Please also see "Registered Agent."
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