What is a limited liability company?

On Behalf of | Jun 11, 2024 | Business |

If there is one thing that holds people back from starting a business in Ohio, it is probably this overriding thought: Where do I begin? You may have an idea for a successful business, and you may even have potential investors lined up. But, getting the formation of your business right is a crucial first step. For many companies, the structure known as the limited liability company – or, commonly, LLC – is the right way to go.

LLC basics

In essence, an LLC is a form of company that provides flexibility and certain advantages of a corporate structure, while protecting the individuals who start the company and invest in it from potential legal and financial risks and exposure. An LLC is kind of a blend between corporations and partnerships.

In an LLC, the makeup of the members of the company can vary. For example, in a partnership, each partner might have an equal share. That can be the same for members of an LLC, but it doesn’t necessarily have to be that way. In an LLC, there may be one member who does more active work than others and, as a result, that member may be entitled to more of a share of the LLC’s profits than other members. There are taxation implications with LLCs as well, with different options to choose from based on what is best for the members and the LLC as a separate entity.

Regardless, all LLCs must be registered with the Ohio Secretary of State. And, in general, most LLCs have an operating agreement to lay out exactly how things work and what is expected of the LLC members. If you are deciding what is best to get your business model off the ground, the legal benefits of an LLC may be something to consider.

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