LLC vs. Sole Proprietorship
Keeping this in consideration, what is better LLC or sole proprietorship? One of the key benefits of an LLC versus the sole proprietorship is that a member’s liability is limited to the amount of their investment in the LLC. Therefore, a member is not personally liable for the debts of the LLC. A sole proprietor would be liable for the debts incurred by the business.
Ownership and Privacy in LLCs
Each Secretary of State office maintains public records that include the ownership of every LLC registered in the state. Although the California Articles of Organization do not list the members of the LLC in the Articles, California requires the LLC to file a Statement of Information within 90 days of the approval of the LLC. The Statement of Information does require a list of the LLC’s members, and it does become public record.
The actual address of your registered agent must be included on your LLC filings, where it becomes public record. This implies that anybody may see this information, potentially causing privacy issues.
Here are some effective methods to locate the owners of an LLC:
- Visit the website of the particular state where the LLC is registered.
- Search for LLC owners by providing the company’s name or the registered agent’s name.
State LLC laws generally protect an LLC member from incurring personal liability for a breach of these contracts. However, an LLC member can be personally liable if the contract is improperly signed or if language in the contract makes the member personally liable.
Establishing an LLC
Having one allows an LLC’s owners, known as members, to write the rules governing the company’s management and operation. What does an LLC Certificate of organization mean? In most states, an LLC Certificate of Organization is a legal certificate from the Secretary of State showing that your LLC was duly formed and is recognized as a legal entity in that state.
An LLC provides limited liability protection for its owners. Banks and insurance companies generally cannot form an LLC but may form a professional LLC (PLLC). An LLC Agreement outlines member rights and is recommended though some states don’t legally require one.
Miscellaneous LLC Information
LLCs offer pass-through profits so they’re taxed as owner income, like a partnership. Ownership and management structures can be flexible. An LLC Operating Agreement helps define internal workings like management and operations.
LLCs allow various strategic moves like business expansion, tax planning and liability protection. But S Corp ownership of an LLC can affect tax treatment and S Corp eligibility rules still apply.
Non-US individuals must provide LLC and member information to get an EIN. A Registered Agent receives official documents but doesn’t have to be a member or manager. Their contact details must be public record.
Reporting beneficial ownership information will be federally required starting January 1, 2024.
International Perspective
In the UK, an LTD offers liability protection and certain tax benefits like an LLC. An LTD is assumed private. Forming one signals reliability. Key differences between public limited companies and private limited companies relate to trading stock and reporting requirements.