Deciding between an LLP and LLC can be difficult unless you fully understand the differences between the two entities. There are many similarities between the LLP and LLC, but there are a few key differences you must examine in making your choice. State laws vary, and it is possible that your type of business is restricted to either the LLP or LLC, so knowing the laws of your state is also important. If you have any confusion on this point, speak with an attorney licensed to practice law in your jurisdiction. The Secretary of State’s office may also be able to provide some insight.
You can form an LLC yourself even if you have no formal legal or business training. A limited liability company is the easiest type of business entity to create and requires only five steps:
- Choose a business name that complies with state law
- File your Articles of Organization and pay the applicable filing fee
- Draft an operating agreement
- Publish notice of your intent to form a limited liability company
- Gather any required licenses or permits needed by your business area
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.
There are three requirements you must meet before you may take a home office deduction: the home office must be (1) a specific area of your home (2) used regularly and exclusively (3) as your principal place of business. The third requirement may also be met if you use the home office to meet with patients, clients, or customers even if the office is not your principal place of business.
Limited liability companies are very flexible business entities, and this applies to ownership restrictions as well. The owners of an LLC are called members. A single member can own an LLC by him or herself, but a partnership of members, a group of members, or even a group of businesses can own an LLC. Limited liability companies are creatures of state law, which means every jurisdiction in the United States will have slightly different rules. The limitations on ownership, however, are fairly consistant across the country.