You have a great startup business idea. Now, you need to know what necessary steps to take to successfully implement your business plan. A friend says, well, you must form an LLC or a corporation. You ask yourself, "what is an LLC and a corporation?" "Do I really need one?"
What is an LLC?
An LLC is the abbreviation for "limited liability company". It is a legal entity recognized by the State of Illinois. The owners of the LLC are called members. The LLC must either be managed by the members or a separate individuals referred to as managers. The LLC's operating agreement is a governing document which details the members and managers' relationship with the LLC. An LLC may only have one member.
What is a corporation?
A corporation is also legal entity recognized by the State of Illinois. The owners of the corporation are shareholders. The shareholders elect individuals to serve as directors. Directors are responsible for the corporation's policies and elect the corporation's officers. The corporation's officers run the corporation's day to day business. The corporation must have articles of incorporation and written by-laws.
Is it really necessary to have either? Are there any other options?
One choses a legal entity such as an LLC or corporation because these entities offer certain tax advantages and provide limited liability for their members or shareholders. Whether such a legal entity is beneficial depends quite a bit on what type of business you are starting.
You of course have other options. You can run your business as a sole proprietorship - the simplest way of doing business. If you are working with someone else, you can run your business as a general partnership or form a limited liability partnership. If you are working with someone else and want to attract investors, you could form either a limited partnership or limited liability partnership.
As you can see, there is a lot to think about when starting your business. I am here to help. If you have questions about choosing the right legal entity, contact me: John Bathke, Attorney at Law, (312) 380-0680, firstname.lastname@example.org