There are advantages to having a Limited Liability Company tax status. This status is fairly new, as most states only started recognizing it since about 1999. LLC owners are referred to as members.
Limited Liability Companies have caught on fast because they offer the advantages of highly flexible tax treatment, versatility and simple operation, and they offer the most tax liability isolation.
For this reason, LLC status is a favorite of small business owners, particularly attorneys.
Single-member Limited Liability Companies have been outlawed in some states, but now all fifty states recognize the legitimacy of single-owner Limited Liability Companies.
No taxes are paid when you transfer sole proprietorship to the LLC.
To start a Limited Liability Company, you must register with your state Secretary of State’s office and pay a fee to file the articles of organization. Organizational budgets are generally easy to file and require only the most basic information about your business, such as name, location, and functions.
There are fee-based websites that will arrange everything for you for a fee of filing fee, plus their services. There are also instructional books and software available to help you submit your own organization articles. Fees for this service can run up to around $150, while state filing fees start at around $50 and can go upwards of $500, depending on the state and the situation.
All states have different qualifications and requirements when you submit an organization article. In New York State, for example, you must publish a public notification of the formation in the local newspaper. This can cost an additional $100 to $200.
You are usually required to designate a person as a registered agent for your Limited Liability Company. The registered agent is basically the party to whom tax and legal notices are sent. If you do not wish to register yourself as an agent, there are a number of companies that will act on your behalf, as your registered agent, for an annual fee.
When choosing between a Limited Liability Company and a corporation as your business structure, filing fees are insignificant in most states. While Limited Liability Company filings are almost always cheaper than corporate filings, generally the difference is only around $100. So, when choosing whether to structure your business as an LLC or a corporation, there are many more pressing issues to consider besides filing fees.