What is an LLC? – Form an LLC (1/11)

What is an LLC? – Form an LLC (1/11)

▶▶ Learn more about LLCs: ◀◀

In this video, we explain:

– What is an LLC
– Why form an LLC?
– Protecting your personal assets
– Speaking the LLC language
– LLCs vs Corporations

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— WHAT IS AN LLC? —

LLC stands for Limited Liability Company. An LLC is a legal entity that protects your personal assets if your business is sued.

An LLC is a Limited Liability Company. It is a legal entity (business structure) that is created by state law.

An LLC can be used to run a business, or it can be used to hold assets (such as real estate, vehicles, boats, or aircraft).

LLC Owners Are Called “Members”

The owners of an LLC are called “members”.

An LLC can be owned by one person (called a Single-Member LLC).

Or an LLC can be owned by two or more people (called a Multi-Member LLC).

The LLC is created by filing LLC Formation Documents with your State and paying the filing fee.

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— WHY FORM AN LLC? —

The #1 reason to form an LLC is for personal asset protection.

By forming an LLC you create a “protective wall” between your business and your personal assets.

Your personal assets include everything that you own: your home, cars, trucks, bank accounts, investment properties, boats, jewelry, etc.

— AN ATTACK ON YOUR ASSETS —

If your LLC is sued, creditors can only attack the assets of your LLC to settle those business debts and liabilities.

Your personal assets are safe and secure.

They are not considered a part of the business.

Again, without forming an LLC, your personal assets are at risk if your business is sued.

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— SPEAKING THE LLC LANGUAGE —

There are two common mistakes people make when talking about LLCs.

“I want to form a Limited Liability Corporation.”

You cannot form a Limited Liability Corporation. There is no such thing. An LLC is a Limited Liability Company.

Or “I’m going to LLC myself.”

Again, this is incorrect. You cannot do that. You can’t “LLC yourself”.

But, you can form an LLC for your business. An LLC is “separate and apart” from you. It is not you.

You form the LLC. Then you own and manage that LLC.

It’s important that you understand the difference in these terms so you don’t sound like an idiot and can speak intelligently about your business.

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— LLC vs CORPORATIONS – THE BASICS —

A lot of people ask us if they should form an LLC or form a Corporation.

Let’s discuss the major differences.

LLCs don’t have to elect a board of directors; Corporations do.

LLCs don’t need to hold board meetings; Corporations do.

LLCs don’t have to keep records of all their meetings; Corporations do.

LLCs are not subject to double taxation; Corporations are.

LLCs can distribute profits however they want; Corporations can’t.

In short, LLCs are the most popular and the most flexible business structure for business owners, entrepreneurs and real estate investors.

LLCs are also inexpensive to setup. You’ll pay a one-time filing fee to…

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