The LLC also is not required to file the same paperwork as a corporation. External investments have to come from other sources. While corporations can sell stock, the LLC cannot raise capital by selling stocks. What It Isn’t:Įven though LLCs can be owned by multiple people, you can’t simply “buy in” to become an owner of the business like you can with a corporation.

Because an LLC combines personal asset protection with the flexibility of having either one or multiple business owners, it is a popular choice for new businesses. In some cases, an LLC may be owned by a single member. The owners of an LLC are commonly called “members.” Each member may or may not have the same percentage of ownership in the business. If your business falls into debt or legal trouble, your personal belongings cannot be taken as compensation - only the assets of the LLC itself are available to your creditors. More importantly, the LLC provides personal asset protection. The LLC is a formal business entity type that blends elements of a corporation with components of a sole proprietorship or general partnership.įor example, an LLC has corporate personhood, just like a corporation does: the LLC can buy property, have a bank account, hire employees, and more. By the end, you’ll have a clearer idea of whether or not an LLC is right for you.

If you’ve talked about forming a business with friends or family, then maybe you’ve heard the following advice: “You should form an LLC!” But what does that mean?īelow we’ll cover everything you need to know about LLCs. Starting a business is an exciting prospect.

Setting up an llc