A Limited Liability Company (LLC) resembles a corporation and a partnership because they both share some protections from certain kinds of lawsuits.(limited liability and therefore offering some protection of personal assets in case of a lawsuit), except an LLC has more flexibility than a corporation, An LLC and partnership both share pass-through income taxation which means that income is not taxed at the corporate level but at the individual owners' level.
Unlike a corporation, partnerships and LLCs have no shareholders, but have members. There can be more than one owner. Limited Liability companies tend to be private companies meaning they are not publically held as some corporations are, and cannot be subject to a hostile takeover by outsiders.
Forming an LLC does not require a lawyer. Forming an LLC entails conducting a name search to make sure your LLC name is unique, applying with the appropriate government agency in your state where you have to supply the name of the LLC, the location of its principal office, the names and addresses of the LLC's owners, and the name and address of the LLC's registered agent (a person or company that agrees to accept legal papers on behalf of the LLC), and get an FEIN from the IRS.
Having an LLC Operating Agreement is optional. However not having such an agreement can increase exposure to lawsuits as Courts have considered such arrangements to be de facto proprietorships. The action of proclaiming the operating parameters of the business may help to legitimize that the entity deserves separate consideration from the owner. This document is an agreement between members of a Limited Liability company (LLC) describing the rights and obligations of the members in relation to each other and to the LLC. The Operating agreement also helps identify responsibilities of each member and managerial concerns and protect their interests as members of the LLC. If you are going to have one, make sure that a copy of the LLC Operating Agreement is kept within the premises of your LLC’s official address.
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