Choosing an LLC for a start-up

One decision that prospective Illinois entrepreneurs will need to make is what type of entity the business will be, and one possibility is a limited liability company. There are a number of things that need to be done in order to create an LLC. One is to choose a business name, and there are certain regulations around how that name is chosen. The next step is to file a document known as the articles of organization.

The state of Illinois does not require an operating agreement to be filed, but it can be to a business's advantage to do so anyway since it creates a structure and set of regulations for the business. It may touch on such aspects as members' responsibilities and how profits and losses are allocated. It is also necessary to obtain the required federal, state and local licenses and permits. It is important to understand all federal and state regulations around employees if any are to be hired.

The federal government does not consider an LLC a separate tax entity. This means that all LLC members pay taxes through their individual returns. For tax purposes, an LLC may be classed as a sole proprietorship, a partnership or a corporation.

As this outline illustrates, forming a small business may have a number of complexities involved in understanding the types of business entities, choosing the right one and then filing documentation and taxes correctly. A person might want to speak to an attorney about the advantages and disadvantages of different entities and which might be suitable for a new business. The attorney also may be able to assist with other aspects of business formation and in any ongoing issues such as disputes with employees.

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