Are you wondering what type of LLC is right for your needs? Starting an LLC is a popular choice for business entities, thanks to the limited liability and flexibility they offer.
But did you know that there are different types of LLCs? Keep reading for a rundown of the different types of LLCs so that you can decide which one is right for your business.
What Is an LLC?
The main purpose of an LLC, or limited liability company, is to help business owners protect themselves from being held liable. In other words, if the LLC is taken to court, the individuals in charge aren’t required to pay off any business-related debts from their own pockets.
Who Are LLCs for?
LLCs are often chosen by business owners who want to limit their personal liability. LLCs can be used by all types of businesses, from sole proprietorships to large corporations.
Types of LLCs
There are a number of LLC options available for businesses. These can be single-member, multi-member, or even anonymous LLCs. Let’s take a closer look at each type of LLC.
Member-managed LLCs are the most common type of LLC. In a member-managed LLC, all members have equal say in management and decision-making. This type of LLC is best suited for businesses with a small number of members who are all actively involved in management.
Manager-managed LLCs are similar to member-managed LLCs, but with one key difference: not all members are actively involved in management. In a manager-managed LLC, one or more member(s) delegate management duties to one or more manager(s).
This type of LLC is best suited for businesses with a large number of members, or businesses where the members are not actively involved in management.
Single-member LLCs, or sole proprietorships, are exactly what they sound like: an LLC with only one member. This type of LLC is best suited for businesses that are owned and operated by a single individual.
Series LLCs are a special type of LLC that allows for the creation of separate “series” within the same LLC. Each series has its own assets, liabilities, and management structure. This type of LLC is well suited for businesses that need to create separate divisions or subsidiaries.
An anonymous LLC is a type of LLC that does not require its members to be listed in public records. This type of LLC is best suited for businesses that want to keep their ownership confidential.
A foreign LLC is a business structure that allows you to operate your company in more than one state. You must register as a foreign entity in your home state and in the state in which you operate your foreign business. The fee for a foreign LLC is double that of a domestic one.
How Are LLCs Taxed?
An LLC business can be taxed in one of two ways: as a pass-through entity or as a C-corporation. Pass-through taxation means that the LLC’s income is taxed on the owner’s personal tax return. C-corporation taxation means that the LLC is taxed as a separate entity.
Choose the Best LLC for Your Business
If you’re questioning whether forming a new LLC is ideal for your business, don’t worry– you’re not alone. Fortunately, there are many types of LLCs to select from.
The type of LLC that’s right for your business depends on a number of factors. If you want to learn more about LLCs, their advantages, and their disadvantages, read this article on corporatedirect.com.