What is an LLC and how are they used? What does LLC stand for? | LLC University®

What is an LLC and how does it work? Learn about the meaning of LLCs.

LLC stands for Limited Liability Company.

A Limited Liability Company, most commonly called an LLC, is a legal business structure that protects your personal assets (your home, car, and personal bank accounts) in the event your company is sued.

0:07 – What is an LLC used for?
0:15 – What are LLC owners called?
0:18 – How many people can own an LLC?
0:27 – How is an LLC created?
0:36 – What is the main reason people form an LLC?
1:19 – Common mistakes people make when talking about LLCs
1:59 – What's the difference between LLC vs Corporation?
2:40 – LLCs are affordable to set up
3:05 – An LLC has low maintenance requirements
3:33 – What are the steps to forming an LLC?

WHAT IS AN LLC?

LLC stands for Limited Liability Company. An LLC is a legal entity that protects your personal assets if your business is sued.

An LLC is a Limited Liability Company. It is a legal entity (business structure) that is created by state law.

An LLC can be used to run a business, or it can be used to hold assets (such as real estate, vehicles, boats, or aircraft).

LLC Owners Are Called "Members"

The owners of an LLC are called "members".

An LLC can be owned by one person (called a Single-Member LLC).

Or an LLC can be owned by two or more people (called a Multi-Member LLC).

The LLC is created by filing LLC Formation Documents with your State and paying the filing fee.

WHY FORM AN LLC?

The #1 reason to form an LLC is for personal asset protection.

By forming an LLC you create a “protective wall” between your business and your personal assets.

Your personal assets include everything that you own: your home, cars, trucks, bank accounts, investment properties, boats, jewelry, etc.

AN ATTACK ON YOUR ASSETS

If your LLC is sued, creditors can only attack the assets of your LLC to settle those business debts and liabilities.

Your personal assets are safe and secure.

They are not considered a part of the business.

Again, without forming an LLC, your personal assets are at risk if your business is sued.

SPEAKING THE LLC LANGUAGE

There are two common mistakes people make when talking about LLCs.

"I want to form a Limited Liability Corporation."

You cannot form a Limited Liability Corporation. There is no such thing. An LLC is a Limited Liability Company.

Or “I’m going to LLC myself.”

Again, this is incorrect. You cannot do that. You can't "LLC yourself".

But, you can form an LLC for your business. An LLC is "separate and apart" from you. It is not you.

You form the LLC. Then you own and manage that LLC.

It's important that you understand the difference in these terms so you don't sound like an idiot and can speak intelligently about your business.

LLC vs CORPORATION

A lot of people ask us if they should form an LLC or form a Corporation.

Let's discuss the major differences.

LLCs don't have to elect a board of directors; Corporations do.

LLCs don't need to hold board meetings; Corporations do.

LLCs don't have to keep records of all their meetings; Corporations do.

LLCs are not subject to double taxation; Corporations are.

LLCs can distribute profits however they want; Corporations can't.

In short, LLCs are the most popular and the most flexible business structure for business owners, entrepreneurs and real estate investors.

LLCs are also inexpensive to setup. You'll pay a one-time filing fee with the state to create your LLC.

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To learn more about LLCs, visit LLC University®: https://www.llcuniversity.com

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DISCLAIMER

This information is provided for educational purposes only and in no way constitutes legal, tax, or financial advice. For legal, tax, or financial advice specific to your business needs, we encourage you to consult with a licensed attorney and/or CPA in your state.

LLC University® is a registered trademark of LLCU Media Group, LLC.
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