{"id":4829,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/forming-an-llc.html"},"modified":"2025-11-10T12:19:00","modified_gmt":"2025-11-10T17:19:00","slug":"forming-an-llc","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/forming-an-llc.html","title":{"rendered":"Forming an LLC"},"content":{"rendered":"\n
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Forming an LLC<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

A limited liability company<\/span> (LLC) is a flexible business structure<\/span> authorized by state law<\/span> that combines the liability protection<\/span> of a corporation with the pass-through taxation of a partnership. This structure legally separates the business from its owners, known as members, protecting their personal assets<\/span> (like homes or cars) from business debts<\/span> and lawsuits. LLCs are popular because profits and losses pass directly to the owners’ individual tax returns<\/span>, avoiding the double taxation often faced by corporations.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Starting a business is an exciting journey for entrepreneurs<\/span>. Choosing the right business structure<\/span> is crucial for success for small-<\/span>business<\/span> owners<\/span>. This guide dives into limited liability companies<\/span> (LLCs).<\/p>\n

Small businesses<\/span> are often set up as LLCs because the structure offers many of the benefits of a corporation without subjecting the owners to corporate taxation. LLCs operate as entities that exist separately from their owners. This means the owners are not personally liable for the businesses’ debts and obligations. Since LLCs are not subject to the federal corporate income tax<\/span>, LLC owners<\/span> can avoid double taxation of company profits.<\/p>\n

The exemption from federal taxation of corporate income has driven the popularity of LLCs, but they are formed under state law<\/span>. That means each state has its own rules and regulations on forming and managing LLCs. This article outlines the process for starting an LLC<\/span>.<\/p>\n

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What Is a Limited Liability Company<\/span> (LLC)?<\/strong><\/h2>\n

An LLC<\/span>, or limited liability company<\/span>, is a business structure<\/span> that combines elements of a C corporation<\/span> with a general partnership<\/span>. Unlike other structures, an LLC<\/span> gives its owners, known as members, protection from personal liability<\/span> for business debts<\/span>. This means that if the business owes money, the personal assets<\/span> of its members, like their homes and cars, are usually safe.<\/p>\n

For tax purposes<\/span>, the Internal Revenue Service<\/a> (IRS<\/span>) doesn’t treat an <\/span>LLC<\/span> as<\/span> a separate tax entity. Instead, profits and losses pass through to members’ individual tax returns<\/span>.<\/p>\n

What Are the Benefits of an LLC<\/span>?<\/strong><\/h3>\n

There are many benefits to structuring your existing business entity<\/span> or startup<\/span> as an LLC<\/span> rather than a sole proprietorship<\/span>, partnership, or traditional corporation. Those include:<\/p>\n