Establishing a limited liability company, commonly known as an LLC, has advantages for many different types of business ideas. This business structure offers personal asset protection and allows for flexible management. Participating owners are referred to as members. The members sign an operating agreement, which lists their contributions to the company and their ownership percentages.
Business ventures requiring substantial capital investments, such as real estate development firms or independent filmmaking production companies, can benefit from establishing a multiple-member LLC. This structure will allow the members to allocate capital for company and tax purposes. For example, the members can allocate a specific amount of money for new equipment. The flexible operating agreement does not require formal meetings or recorded corporate minutes. The LLC structure does not make any member liable for company debt.
Business professionals, such as event planners, promotional agents or tour directors, who coordinate events with specific start and end dates can benefit from establishing an LLC. The company's members choose how long this business structure lasts. "The duration of the LLC is usually determined when the organization papers are filed," according to the Small Business Administration. The members may take a vote and choose to continue or extend the business structure. Many professional business planners allow the LLC to lapse and create a new company for their next gig. This helps to prevent mismanagement of funds and to keep each event-promotions entity separate.
Making crafts, painting and dog walking are a few business ideas that can benefit from opening a single-member LLC. This business type gives you the benefit of personal asset protection and also establishes you as a company, which allows you to purchase supplies wholesale. Although your business is primarily run from your home office, a home purchased under your name is not an asset of the LLC. As the managing member, any bottom-line profit is viewed as earned income and you are subject to self-employment tax.
Mercedes Valladares is the founder of M721Organics and has been an independent designer for over 15 years. Her work experience commenced during college with manufacturers based in New York and Hong Kong. Her education includes LIM College, International Fine Arts College and design certification from the Paris Fashion Institute. She produces eco-crafting videos and writes recycling articles online.