LLC FAQs
	What is a limited liability company? Do you need an attorney to form an LLC? What are the main differences between an LLC and an S corporation? What legal documents are needed to form a LLC? Can my LLC have an unlimited lifespan? How many persons are needed to form an LLC? What is the difference between a "member" and a "manager?" Does an LLC have to hold meetings? How much will it cost to operate an LLC? What if I am not a U.S. citizen but I live in the U.S.? I am a U.S. Citizen living outside the U.S., can I still form an LLC? Can I have special text included in my operating agreement? What do my articles of organization look like? When will I get the original copy? Can an LLC own a corporation, or can a corporation own an LLC? How can I include this on your questionnaire? I am moving to another state. How do I move my company? How can I convert my limited liability company (LLC) to a corporation? How can I convert my corporation to an LLC? How do I add a member to my LLC? Why am I getting junk mail and phone calls with someone else's name? I want a professional LLC. How do I select that on the questionnaire? What is a limited liability company? A limited liability company, or LLC, is an entity created under state law which has characteristics of both a corporation and a partnership. Like a corporation, the owners of a LLC are not personally liable for the debts of the LLC. Like a partnership and sole proprietorship, an LLC has operating flexibility and is a “pass-through entity” for tax purposes. This means the profits of the LLC are passed through and taxable to the members of the LLC. Do you need an attorney to form an LLC? You do not need an attorney to form an LLC. You can prepare and file the legal paperwork, or use a professional business formation service such as LegalZoom. If you choose to form your LLC with LegalZoom, you will only need to answer a few simple questions online, and we will do the rest. We will review your answers for common mistakes, prepare your paperwork, file it with the state, and even send you an LLC kit with seals and certificates upon your request. If you think you have a complicated or special circumstance, you may want to seek the advice of an attorney. What are the main differences between an LLC and an S corporation? Although an S corporation shares the same tax characteristics as an LLC, an LLC has more flexibility and fewer restrictions than an S corporation. An S corporation cannot have more than 75 stockholders, cannot issue more than one class of shares, and is subject to more formalities than an LLC (such as the requirement to hold an annual meeting of stockholders). However, member-employees of an LLC are required to pay social security and Medicare taxes on the profits of an LLC over and above the member's salary. Stockholder-employees are not required to pay these taxes on profits over and above the stockholder's salary. What legal documents are needed to form a LLC? In order to create an LLC, articles of organization first need to be filed with the Secretary of State or similar government agency. Next, the LLC members need to enter into an operating agreement which sets forth the rights of the members and the rules for running the company. An LLC may also need to apply for a tax identification number with the IRS. LegalZoom can prepare all of these required documents for you. Can my LLC have an unlimited lifespan? In most states, the answer is "yes." Recent changes to the IRS code have promoted changes in state laws permitting LLCs to be created with an unlimited life. Please check with the Secretary of State where you are filing to see if this applies. How many persons are needed to form an LLC? In all states, only one person is needed to form an LLC. Recent changes to the IRS code have promoted reforms in state laws permitting single-member LLCs. What is the difference between a "member" and a "manager?" A member is an owner of the LLC and is similar to a stockholder of a corporation. A manager is a person chosen by the members to manage the LLC, which is similar to a director of a corporation. A manager can also be a member. Does an LLC have to hold meetings? The answer is usually no, unless the LLC's operating agreement requires meetings. LegalZoom’s operating agreements make meetings optional. This is one of the key advantages of an LLC – fewer formalities, which means less paperwork and less chance that the members will inadvertently violate the law and thereby lose their liability protection. How much will it cost to operate an LLC? Each state charges some type of annual fee to maintain an LLC. In many states, you must also submit an "annual report" or "statement of information," which is a one-page form. Some states also have state taxes. Total annual fees for three popular states – California, Nevada and Delaware – are as follows: California: A reporting fee of $25 and a statement of information are required 90 days after formation and then every two years. An annual LLC tax of $800 is due 75 days after formation and every year thereafter. If the LLC's net income exceeds $250,000, there is a minimum annual LLC fee of $865. Nevada: A $165 fee and an initial list of managers and members are due 30 days after formation. The annual report filing fee is $85. There is no state income tax or franchise tax. Delaware: There is an annual LLC tax of $100 due each June 1, beginning the year following formation. There is no state income tax for LLCs whose activities are limited to maintaining an office and not conducting business within Delaware. For information on other states you should contact your accountant. What if I am not a U.S. citizen but I live in the U.S.? Neither the members nor the officers of a U.S. filed LLC need be U.S. citizens. You may use your passport number instead of your social security number to complete any federal forms. (For S corporation status LLCs, the majority of stockholders need to be U.S. residents.) I am a U.S. Citizen living outside the U.S., can I still form an LLC? If you are presently residing in a non-U.S. country, you may use LegalZoom to form your LLC. Can I have special text included in my operating agreement? You may add special text. However, you have to know which article to include it in and must send in the exact text so that it can be included in a legal document. You may want to contact an attorney to add special text to your documentation. What do my articles of organization look like? When will I get the original copy? Every state is different, so there is not one clear description of articles. In some states, the articles of organization (what they are called when you file an LLC) look like a certificate. Other states simply stamp a filing date of filing on a form application for organization. Some articles are a faxed or photocopied black and white document. The articles generally are labeled as “Articles of Organization” and have an official filing date stamped on them. Can an LLC own a corporation, or can a corporation own an LLC? How can I include this on your questionnaire? Generally speaking, unless limited by state law, to own an LLC the corporation would have to be the sole member. If an LLC is to own a corporation, it owns all of the corporation’s shares. We recommend you speak with a tax attorney or an attorney regarding this option. I am moving to another state. How do I move my company? LegalZoom can assist you in dissolving the already existing LLC and refile a new LLC in the new state. We can certainly help you form an entirely new LLC, but it is best if you speak with an attorney or accountant to consider your options. How can I convert my limited liability company (LLC) to a corporation? There are many ways to convert an LLC to a corporation, each of which has different legal and financial implications. For example, you could convert through a merger, or you could simply start a new corporation and contribute the assets of the LLC into the corporation. We can certainly help you form an entirely new corporation, but it is best to speak with an attorney or accountant to consider your options. If you would like to find a local attorney who can help, you can try our attorney-by-request service. You describe what you need, and attorneys will then compete for your business. Click on this link for more information: http://www.respond.com/?src=49 How can I convert my corporation to an LLC? You cannot convert a corporation to an LLC. You will need to first dissolve your corporation, and then you can form a new LLC using the same name. How do I add a member to my LLC? You do not need to go through LegalZoom to add or subtract a member from your LLC. First, you should read your operating agreement for more information on the procedure. If any of the members are listed with the state, you will need to go directly to the Secretary of State and update the information with them as well. Why am I getting junk mail and phone calls with someone else's name? LegalZoom does not, nor will it ever, sell your information to another company. We believe selling your information would violate your privacy, and we pride ourselves on offering the best service and the highest degree of security to our customers. In most cases, it is actually the Secretary of State who makes this information, or your registered agent’s address, public. Even if you choose LegalZoom to be your registered agent, some states still list your business address on public records. I want a professional LLC. How do I select that on the questionnaire? If your state law allows professional LLCs, you will need to include in the special instructions that this is a professional LLC. An additional $50 will be charged on your account once we have received your application and confirmed with the Secretary of State that this may be filed as a professional LLC. If you are not sure whether your LLC should be a professional LLC or not, you may want to check with your state licensing board or contact the Secretary of State for more information. Point of origin credit for this file is given to LegalZoom.com, Inc., a registered and bonded legal document assistant, #0104, Los Angeles County. LegalZoom.com is not a law firm and is not a substitute for the advice of an attorney.