How to Start an LLC - Some Basic Information About LLCs

One of the first steps in how to start an LLC is to file a fictitious name statement. The name statement will show all of the information about your new business structure including your name, address, and ownership of the LLC. All LLCs have a separate filing of the same kind of paper. There are several types of these, all with their unique format so here is a brief overview of each:

How to Start an LLC

How To Start An LLC - Knowing The Insights

"Sole proprietor" or "sole proprietorships" are extremely popular and can be helpful if you are unsure about how to set up your business structure. "Special purpose" LLCs are another option for small business owners. These allow many different types of business entities to be incorporated such as partnerships, corporations, LLCs, and even single proprietorships. Allowing many more possibilities in how to structure your small business allows more possibilities for income. Also, sole proprietorships are simple to file and require very little licensing or registration fees. Still another popular choice for sole proprietor LLCs is the double bottom line corporation, otherwise known as a double-entry LLC.

These are what are known as "pass-through" LLCs. What makes them different than other forms of LLCs is that they incorporate two people or more but only one entity. In other words, the person who owns the LLC has control of it, while the other person, called a partner, receives the LLC's income or services. As a result, both partners receive the key takeaway from the business structure. This means that the partners share in the profits and losses of the business, while the owner retains complete control of the LLC. Here's a key takeaway from all of this: if you are thinking about how to start an LLC, you should consider a pass-through form.

How To Start An LLC - The Types Involved And The Differences

As previously mentioned, there are two main types of LLCs; personal and partnership. One important distinction between the two is that sole proprietor LLCs are limited in what they can do; the personal use and purpose of a sole proprietorship are entirely up to the individual owners. A partnership, on the other hand, is a separate legal entity; one can be operated as an LLC and have its operating agreement and additional regulations. The differences between these two types of LLCs are significant when you are considering how to start an LLC, especially when it comes to incorporating.

So, now that you understand the difference between the personal and the partnership LLC, let's talk about how to start an LLC that uses pass-through registration. Some rules are governing the formation of these types of LLCs, and are outlined in the most recent amendatory laws that took effect immediately following the Supreme Court's ruling in Citizens United v. Federal Election Commission. The most important thing to know is that an LLC that uses a pass-through registration is required to disclose the fact that it has a private purse and cannot act in the same manner as a corporation. This key takeaway is important because it prevents the LLC from having any secret meetings or any other irregular practices.

Formation Of LLC

One of the other main rules governing the formation of LLCs is the need for an appointed director and registered agent. An appointed director and registered agent are needed because they are the only two people who have the authority to make decisions and also manage the LLC. This is also necessary because they have the standing to litigate any disputes that may arise. Unless an individual owns more than 50% of the LLC, he or she cannot simply select their relatives and friends as members. For these reasons, an appointed director and registered agent are required on all LLCs.

Definition Of LLC

Another important piece of information that many people are not sure about when it comes to how to start an LLC is the basic definition of LLCs. In short, an LLC is a corporation that has been granted tax status by the IRS. It can be called a "pass-through" business because the owners are only taxed on the income that they receive and not on the profit that is generated by the business. LLCs are separate entities from the people who own them and therefore are not subjected to all the same corporate laws that corporations are. Because of this distinction, it is generally easier for new business owners to incorporate their businesses without needing to have any experience or knowledge of how the system works.


While many people are familiar with the idea of an LLC, they are not aware of all the options that exist when it comes to how to start an LLC. Most small business owners want to incorporate as an LLC because of its obvious advantages over other business structures. As an LLC has no personal assets, there is no need to worry about estate taxes or any kind of double taxation, and it has a simple set of procedures that make it easy to do business. All of these things add up to make an LLC the preferred option for many small business owners.

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