LLC stands for “Limited Liability Company,” and it’s one of several different types of business you can create in the United States. An LLC provides some distinct advantages to an entrepreneur or business owner, including liability protection, tax advantages and easier administration than some other types of entities.
What Is an LLC, and What Is It Used For?
An LLC is a business entity that can be created by one or more people. Once an LLC is created, it effectively becomes a separate company that you can use to run every aspect of your business through. LLCs are quick and easy to set up and require minimal overhead or administration to run. Simply put, creating an LLC means that you have set up a company — separate from your personal finances and assets — and can use that company to conduct business.
How Do I Create an LLC?
You create an LLC by filing paperwork with your secretary of state (or a similar body in your state’s government that is responsible for administering businesses). You will typically need to complete “Articles of Organization” and file them. You can do this yourself or have Incfile complete the process on your behalf.
How Does an LLC Protect You?
Because your Limited Liability Company is a separate entity from you as an individual, the liabilities of your business belong to that entity fully. This matters if your business is sued or needs to pay a major debt or penalty. Effectively, an LLC helps make all of your business assets (including its bank account, equipment, office building, etc.) separate from your personal assets, like your savings account, home or car. Even if a penalty is levied against your business, your personal assets are insulated from that penalty. Without the protection of a separate business entity, your personal assets could be vulnerable if the business runs into trouble.