LLC Formation and LLC Incorporation explained:

llc formation: the benefits of LLC incorporation

A limited liability company, or LLC, is often the perfect legal form for a new business and sometimes even the perfect legal form for investments. There are two, easy-to-understand reasons for this.

The Legal Reason You Should Consider an LLC

A limited liability company, or LLC, should give you all the same legal liability protection as a regular corporation. But unlike a regular corporation, an LLC doesn’t force you to jump through a bunch of legal hoops.

With an LLC, for example, you won’t need to have a board of directors nor will you need to have regular board of directors meetings. Obviously, without a board of directors and board of directors meetings, you also won’t have to keep board of directors meeting minutes.

In short, a limited liability company amounts to a “lite” version of a corporation. Remember those “lite beer” commercials that promised same great taste with a third less calories? An LLC can make a similar promise… with an LLC you get the same great limited liability protection but with a third less red tape.

The Tax Reason You Should Consider an LLC

A limited liability company is not only attractive for legal reasons, however. An LLC also provides businesses and taxpayers with a neat tax benefit.

In a nutshell, an LLC can choose how it wants to be treated for tax purposes. More specifically, an LLC with one owner is treated by default as a sole proprietor but can usually be treated as a C corporation or S corporation. An LLC with multiple owners is treated by default as a partnership but can also be treated as a C corporation or as an S corporation.

What this tax flexibility means is that you can (and should!) pick a tax treatment that minimizes your tax and accounting costs.

Why This LLC Formation Web Site

Clearly, LLCs can be a wonderful tool for businesses and investors. Unfortunately, setting up an LLC can be a little bit confusing. Accordingly, what I’ve done is write up a set of step-by-step instructions for setting up an LLC. These instructions, which I'm calling "Do-It-Yourself LLC Formation Kits," come as a roughly 20 pages pdf document, and supply example completed forms.

The instructions also provide a bunch of background information on just how much legal liability protection you typically get with a limited liability company and information about how to optimize the taxation of your new limited liability company.

By the way, let me answer a common question I get about whether the do-it-yourself kits include blank forms. No, they do not, but this actually isn't an issue. You don’t need the actual blank forms in a kit because you can and should download these from the appropriate state’s web site using hyperlinks in the instructions set.