Before sitting down to write a business plan for your LLC, first write a business plan outline. This outline will contain all of the pertinent information that you need to include in your business plan and will form the basis of your brainstorming. Your outline will serve as your business plan template and should reflect your core business model. Though you need not submit the results of your brainstorming to the state, it is a good idea to have a solid business plan before registering your LLC. Discuss your plans with your fellow members and use the following outline to guide your strategy.
A Professional Limited Liability Company (PLLC) is similar to a professional corporation. Both are organized to provide professional services. Professionals — such as accountants, architects, lawyers, engineers, chiropractors, dentists, and doctors — are permitted in many states to form a standard LLC. However, some states require that these individuals form a PLLC, a similar but distinct entity from the limited liability company. If your state offers the PLLC entity and your industry is one that requires a license from the state, you may consider forming a professional LLC.
Before you form your new company, educate yourself about the differences between the business entities you could choose. Your choice will have a lasting effect on your business’s finances, legal status, and tax requirements.
For most small, closely held, and family businesses, your choice will come down to an S-Corporation or an LLC. An S-Corp is just a standard corporation that files Form 2553 with the IRS. This election distinguishes S-Corporations from C-Corporations and has an effect on how the corporation is taxed.
Corporate stock is a measurement of the ownership of a corporation. If a corporation has 1,000 shares of stock and you own 400 shares, you can say that you own 40% of the corporation. Whether the stock is traded privately or publicly on the stock exchange is irrelevant; shares are simply a way of determining an individual’s share of ownership in a corporation.
An LLC is different, however. LLC owners are not referred to as shareholders, but as members. A member’s share of ownership in the LLC is determined by the LLC’s operating agreement or by some other document that outlines each member’s ownership interest. The LLC ownership structure is different from a corporation in this way. Though some LLCs may issue ownership certificates to its members so that each person knows how much of the LLC they own, these are not true stock certificates. Only corporate shareholders own stock.
Because of the ownership structure of LLCs, there is no such thing as a publicly traded LLC. A limited liability company will not appear on the NASDAQ and may not issue stock like a corporation does.
You are permitted to form an LLC in any U.S. state regardless of where you reside or where you intend to do business. Though some states offer more advantages to LLC owners, there are two negatives to creating an LLC in other states: you must register as a foreign LLC in each state you intend to conduct business, and you must designate a registered agent in the state in which you started your LLC.
There are two states commonly touted as the best for LLC formation: Delaware and Nevada.