A Limited Liability Company (LLC) is a business that is its own legal entity; they can be a single member LLC (a single owner) or a multimember LLC (multiple owners). An LLC is NOT an INCORPORATED business like a C Corporation or an S-Corp, but it has the benefits without the burdensome and expensive regulations and corporate formalities, making it an ideal way to start a small business or convert an existing business for personal asset protection.

1. Forming an LLC

2. What is an LLC?
• A Limited Liability Company (LLC) is a business
that is its own legal entity; they can be a single
member LLC (a single owner) or a multimember
LLC (multiple owners).
• An LLC is NOT an INCORPORATED business like a C
Corporation or an S-Corp, but it has the benefits
without the burdensome and expensive
regulations and corporate formalities, making it
an ideal way to start a small business or convert
an existing business for personal asset protection.

3. Benefits
• Personal Asset
Protection
• Pass through taxation
– Corporations are
essentially taxed twice:
– Once on the net income
– Dividends are then taxed
• Less regulation and
paperwork

5. Benefits
• Protect Yourself with Limited Liability
• The owners of the business are not personally liable for the LLC's debts and other
liabilities similar to a corporation, as the business is its own legal entity.
• Save Money with Pass-Through Taxation
• The LLC also has pass through taxation of business profits like a sole proprietorship
or partnership, where the owners pay the taxes on their individual tax returns and
corporate income tax is not paid, hence avoiding the double taxation of
corporations
• Have the Flexibility of Single or Muti-member Ownership
• An LLC can by owned by one individual or by multiple people. If you plan to start a
multi-member LLC, we highly recommend drafting an operating agreement to
protect the members from future legal disputes.
• You can Choose Different Management Structures
• LLC can be managed by all its members (owners) or the members can elect a
manager or managers (who can also be members) to manage the business.

6. LLC

7. An LLC is only one of several different types
of business entities:
• S-Corp
• C-Corp
• General Partnership
• Sole Proprietorship

8. LLC vs INC
• An LLC has pass-through taxation avoiding the double taxation of
business profits, unlike a corporation
• Greatly reduced State Regulations and formalities compared to a
corporation
• Another previous advantage of a corporation, known as Corporate
income splitting, is also now available to LLCs, if an LLC elects to be
treated as a corporation for tax purposes by the IRS by filling form
8832. This is really only useful when the LLC is making sufficient
profit that it can pay its members and still retain a significant chunk
of it for reinvestment in the LLC.
• The main advantage a Corporation has over an LLC, is that it has
more options to raise capital for investment, through the issuance
of specific shares to investors or direct public offerings. Though an
LLC can be converted to a corporation when its members feel it is
appropriate to do so.

9. Benefits of an LLC over S-Corp
• S–Corporations are incorporated entities that
have pass through taxation, like an LLC, and
which have shareholders who elect a board of
directors who manage the business. They
were popular before the arrival of the LLC.
LLCs have the benefits of the S-Corp but do
not have the cumbersome and expensive
administrative and regulatory requirements.

10. Differences

11. You can go about forming an LLC by
taking just five easy steps:
• Find a business name that is available (not taken by
another company) and that conforms to your state's rules
regarding names for LLCs.
• File your paperwork, normally called the "Articles of
Organization," and pay the fee associated with the filing.
• Make the operating agreement that will dictate how the
LLC will be run. This normally lays out the rights and
responsibilities of all LLC members.
• In some states, you must also publish a notice that you
intend to form an LLC.
• Get all the licenses and permits that your business needs to
run.

12. Operating Agreement
• An operating agreement is a legal document
outlining the ownership and operating
procedures of your LLC. This agreement
allows you to form financial/working relations
with co-owners into an established system
suitable to your business.

13. Operating Agreement
• A solid operating agreement should help to
identify/clarify:
– Company ownership responsibilities
– Profit sharing
– Ownership changes
• Draft Operating Agreement
– Review sample documents online or through
lawyer or accountant

14. The following states legally require an
operating agreement for LLCs:
• California for Single and Multi-Member LLCs
• Delaware for Single and Multi-Member LLCs
• Maine for Multi-Member LLCs
• Missouri for Single and Multi-Member LLCs
• Nebraska for Single and Multi-Member LLCs
• New York for Single and Multi-Member LLCs
• Even if your state requires you to have an
operating agreement, you do not need to file it
with the State. Simply use it for your records.

15. Operating Agreement
• Even though an operating
agreement is not mandatory in
most states, it is considered a
prudent business practice,
especially if you are starting a
multi-member LLC.
• Many people don't expect to
have legal problems with
friends or family in their
business pursuits, however
lawyers will tell you that many
legal troubles could've been
avoided if an operating
agreement had been drafted.

16. Secretary of State NM
• http://www.sos.state.nm.us/Business_Service
s/NM_Domestic_LLC.aspx
• Articles of Organization
• Appointment of Designated Registered Agent

17. Meeting Minutes
• LLC Annual Meetings. LLC owners, called
members, are not required by
state LLC statutes to hold an annual meeting
and keep minutes. However, the LLC structure
allows members to determine how an LLC will
be structured and operated by executing an
operating agreement.
• Meeting minutes are a good idea in order to
document what is decided and agreed upon.

18. Register
• With state and Federal tax authorities
• Get an EIN number
– Employer Identification Number
• Get local business license

19. Forming an LLC