In today's business world, there are many new features of risk protection for owners and investors. With new incorporated business laws, companies face a high amount of liability. Fortunately, limited liability companies have reduced the chance of creditors taking advantage of firms who go into unsatisfied debt.
A limited liability company positions itself as the middleman between a corporation and a partnership. Most limited liability company owners report business profits or losses on their personal income tax returns; the limited liability company itself is not a separate taxable entity (http://www.lawsguide.com). Similar to most corporations limited liability company owners are insured form being personally liable for their firms debts or claims. In other words, debt collectors can't take a owners house or car.
In order to form a limited liability company there are many advantages. For instance, one can be a sole owner of a limited liability company in all states except Massachusetts. Many firms have high exposure to lawsuits inflicted on their business. The limited liability company works in cases of businesses dealing directly with the public. In this at times commercial liability, insurance does not protect the owner's personal assets.
In the majority of states, the only legal requirement is that you file "articles" of organization with a particular state's limited liability company filing office. This office is a branch office of the Secretary of State. This specific document is usually referred to as a "certificate of organization" or a "certificate of formation". Another important step to starting a limited liability company is establishing an operating agreement. The great advantage of this is that the state documented filing are non-technical and do not require a lawyers opinion. By not doing so may resort to the state overseeing the limited liability company. .