What Is a Limited Liability Company?
A business is defined as any entity or person engaged in commercial, agricultural, or other productive activities for the benefit of others. In addition, a business may also be defined as a partnership that exists for the benefit of more than one individual. Most businesses are privately owned and controlled by the corporation, partnerships, or sole proprietors. Other types of businesses are publicly held companies, such as partnerships, limited liability companies (LLCs), and corporations.
There are many types of businesses, including: farms, manufacturing, retailing, services, transportation, construction, real estate, intellectual property, financial activities, and franchises. Focusing on these different types of businesses will help individuals and businesses understand what they are looking for in an entity to manage. The most common businesses are for-profit and public limited liability companies. These two categories cover most of the United States economy.
There are many corporations in the United States, but only a few are truly successful. Many businesses are categorized as private for-profit companies. While there are several publicly held corporations in the US, many businesses are operated by one or a handful of owners. Some examples of this type of corporation are Cargil, Schlumberger, AT&T, Apple, Microsoft, Wal-Mart, etc.
Private corporations are allowed to run their business the way they choose. They do not have to register for state or federal government benefits, have to follow strict rules, or pay taxes to the government. Instead, they keep their profits in their own accounts. The main article for this type of corporation is that they are not required to file an annual report with the IRS. This allows them to save large amounts of money on taxes and allows them to spend their profits however they see fit.
Most private corporations in the United States operate independently of other businesses, although they may be required to merge with other privately owned businesses if they become larger than 50 people. In addition to being able to handle their own direct sales and marketing, they are also allowed to buy and sell stock. The main article for this type of company is that they are not required to hire employees, pay workers, manage their own accounting, and submit reports to the government. In addition to business operations, they are also allowed to engage in other types of commercial law practices including intellectual property development, franchising, financing, and acquisitions.
A sole proprietorship, also known as a partnership, is a type of business where two or more people are owners of the same entity. This entity is called the entity and it is entirely separate from the owners individually. The main article for a sole proprietorship is that the individual or persons can engage in all the activities of the business by themselves. This allows them to save large sums of money on business overhead and allows them to concentrate on developing the business themselves.
A limited liability company, or LLC, is a type of corporation that has different operating procedures than sole proprietorships and a few other differences. A limited liability company operates under limited liability laws that give each owner a right to be solely responsible for their own profits. Because of these laws the owners are often used to keep the books and conduct meetings as an entity separate from the people who actually own and operate the business.
Corporations have various ways to finance their growth and development including borrowing money from the investors through a credit facility, borrowing money from the shareholders, borrowing from the government through bonds, sharing capital between owners, using retained earnings as capital, using the property as collateral when borrowing money, and using shareholder equity to finance the growth of the corporation. Many small business owners prefer to form a limited liability company or LLC so that they can reap the tax benefits of corporation ownership without worrying about being financially responsible for everything their business generates in profit. However, many businesses still prefer to maintain the individuality of the sole proprietor or sole proprietorship even when they have a limited liability business structure. As stated before, most businesses still prefer to retain the individuality of the business so that the shareholders are given each individual right to decide how to run the business and to benefit each other personally.