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What Can You Do With An LLC?

Have the question, ‘What can you do with an LLC?’ crossed your mind when someone advised you to form an LLC? How it helps its members, operate businesses and protect their assets makes it unique and popular.

It offers benefits and allows members to do lots more activities than other business corporations. However, the LLC also has some limitations for its members.

Let’s dive deep into the LLC world.

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Did you buy an LLC? Now, you have plenty of options with an LLC. It is versatile and has the potential to offer you many options. Here are some things you can do with an LLC:

1. Start A Business

You can quickly start various companies under the LLC category. For example, tech startups, retail stores, consulting firms, restaurants, etc.

2. Protect Your Assets

Do you want to put your assets at risk? LLC has its own legal entity, and it does not include your assets in the business. So you can keep your assets separate while operating an LLC.

3. Pass-through Taxation System

LLC does not pay federal taxes directly. It passes through the profit or loss to the owner’s account. The owners pay taxes.

4. Flexible Management

You can keep the management process flexible. You can hire employees or manage the LLC yourself.

5. Owner Numbers Changeable

You can remain as the only member or get multiple members for your LLC.

6. Professional Services

Suppose you have occupations like doctors, lawyers, consultants, or others. In that case, you cannot form an LLC but a PLLC (professional limited liability company) can do. It provides liability protection, just like an LLC.

7. Holding A Company

You can use your LLC as a holding company to own other businesses.

8. Joint Ventures

Use your LLC to join multiple parties for a specific business venture.

9. Business Expansion

If you already have a business, use an LLC to expand your business market or launch a new product.

10. Manage Intellectual Property

The LLC can handle and protect intellectual property like patents, trademarks, and copyrights.

11. Franchise

Franchise organizations commonly use LLCs for individual franchise sites to combine franchising benefits with LLC flexibility.

What You Can’t Do with an LLC?

Though there are many things that you can do with an LLC, there are a few things that you cannot do with an LLC. Let’s have a look below:

  • LLC cannot issue securities, stocks, or bonds. So, you cannot give out new stocks and get new investors.
  • LLC is not for professionals. You can be active in various occupations. For example, a doctor, lawyer, consultant, etc. So, opening a PLLC to enjoy LLC benefits will be best.
  • If someone sues you for your negligence, you will be personally liable. The lawsuit may be about your LLC, but the allegations against you will put your liability protection at risk.
  • Not responsible for personal guarantees. LLCs will not protect your assets if you guarantee a contract. It will put your assets at risk.
  • Did you maintain the LLC as a legal entity? If not, then alter-ego liability can be a threat to you. The court will not consider the LLC a legal entity. So, you will have personal liabilities.

What to Do After Forming an LLC?

Right after forming an LLC, you must do many activities to start and run your LLC. Follow the list below:

  1. Make an operating agreement to operate your LLC smoothly. It will help avoid future disputes.
  2. You can choose the S-corp option for tax classification. While your business has an LLC entity, you and other members receive salaries and profits. As a result, you need to pay taxes on both. But once your business becomes an S-corp entity, you pay tax only on the salary, not the profits.
  3. Register for taxation. The state taxes are sales tax, withholding tax, franchise tax,  employment tax & unemployment insurance tax. The taxation rules and costs vary by state, so contact the professionals or your office to know precisely about your state’s taxation conditions.
  4. Gather the money to fund your LLC’s startup capital.
  5. Get a DBA (Doing Business As) to use for branding.
  6. Go to the offices of your state to get the required licenses to run your business legally.
  7. Apply and get an EIN from the IRS website.
  8. Open a business bank account using your LLC name and documents.
  9. Get general liability insurance or a business owner’s policy (BOP). It will protect your LLC from accidents, injuries, and negligence claims.
  10. Hire a registered accountant in the state. It’s necessary to complete all the legal documents correctly and on time.
  11. Hire a logo designer and make a unique logo to represent your LLC.
  12. Build a website to represent your LLC online.
  13. Don’t forget to renew licenses, pay federal taxes, and bear all the maintenance costs to run your LLC efficiently.
  14. Get a business phone number for your LLC. It is used only for business purposes. It will keep personal and business phone calls separate.

Benefits of Forming an LLC

There are many benefits that the LLC offers to its members. Let’s see it below:

  • Limited liability
  • Pass-through taxation
  • Management structure flexibility
  • Membership advantage
  • Credibility
  • Limited compliance

Frequently Asked Questions

What can I do with an LLC?

You can use an LLC for various purposes. For example, you can use an LLC to own real estate, hold assets, and operate a business.

Is an LLC good for starting a small business?

Yes! LLCs are perfect, especially for small businesses. It protects the owner’s assets and allows them to operate a business with limited liability.

Can I add more members to the LLC?

Certainly! You can join the LLC as a single member or add more members. It can be a sole proprietorship, partnership, or even a larger company. Their investments limit each member’s liability.

Can I protect my assets using an LLC company?

Yes! It’s the best benefit for an LLC company. It protects your assets, like your home, car, cash, and other things, from business debts and liability claims against the company.

Can I use an LLC for my estate planning purposes?

Yes, you can do it legally. Setting up an LLC will help you give your assets to your children or beneficiaries. This can help protect investments and make it easier to pass on a fortune.

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