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Managing an LLC

Try this highly flexible legal structure for your small business
By Matt Alderton, Writer, Editor and Media Consultant Logolepsy Custom Content and Communications A limited liability corporation or LLC is a popular legal structure for small businesses and especially for sole proprietors because there are few ongoing formalities that need to be followed. LLCs also provide flexibility in terms of management. Owners can choose to manage the company themselves — acting like partners — or appoint a team of separate managers to run it for them — acting as shareholders. The downside to all this informality: LLCs can spin out of control. Employing management strategies to keep your LLC on track can:

1. Ensure continued agreement among owners.
2. Provide direction for the business.
3. Ensure compliance with tax filings.
4. Facilitate business and financial transactions.

 

Develop an operating agreement

Although most laws don't require that LLCs have an operating agreement, your business will only benefit from having one. Among other things, an operating agreement usually details your accounting methods and internal management structure.
Try: Create a customized operating agreement online, and then purchase a printed copy, at LegalDocs.

File the appropriate tax forms

Owners of LLCs must report profits and losses on their personal income taxes, as an LLC is not a separate, taxable entity. When it comes to taxes, LLCs are not considered separate from their owners and may therefore elect whether they want to be treated by the IRS as a corporation, a partnership or a sole proprietorship.
Try: Download all the tax forms your LLC will need from About.com; then, find an experienced small business accountant to help you fill them out courtesy of the National Association of Small Business Accountants.

Maintain certified copies of your records

For certain business transactions, such as opening a business checking account or leasing office space, you may need to produce copies of your LLC formation papers. It's a good idea to keep certified copies of any amendments to your LLC as well.
Try: Get certified copies of your records from the Company Corporation.

Schedule regular meetings

Although regularly scheduled meetings aren't required in many states, it's a good idea to hold them to ensure that all members of the LLC remain in agreement with the running of the business.
Try: When your members meet, protect yourself by documenting the conversations and decisions; Nolo offers an eForm to help you take official minutes.

Make amendments

In the course of operating your business, you and the other members of your LLC may need to make changes to your articles of organization. For example, if you move your office or if any of the founding members leave the business, you'll need to make an amendment. Many states require that an Articles of Amendment form be filed when making any additions, deletions or changes to an LLC's articles of organization.
Try: MyCorporation.com offers an Articles of Amendment form that can be filled out online.

File dissolution forms

Many states require LLCs to list a dissolution date in the articles of organization. An LLC may also be dissolved upon the death, withdrawal, resignation, expulsion or bankruptcy of one of its members. To close an LLC, Articles of Dissolution must be filed. These forms are sometimes referred to as a Certificate of Dissolution or a Certificate of Cancellation.
Try: LegalZoom.com can prepare all the necessary paperwork and file your Articles of Dissolution with the appropriate state agency.

• In a corporation, profits must be distributed evenly among shareholders on a dollar per share basis. LLCs, however, can distribute income in any way the owners choose.
• Most states allow business owners to form an LLC without the aid of an attorney; the paperwork for doing so is easy to understand and simple to fill out.
• Non-U.S. residents are allowed to be members of LLCs.
• An LLC can have an unlimited number of members.
• All members of an LLC, regardless of their number, are subject to self-employment tax.