The LLC company structure is very similar to the old familiar corporate structure, but there are some significant differences.
State LLC Company Structure and Corporate Structure Required Filings
Both the corporate structure and the LLC company structure require a filing with the state. Basically, you are putting the world (at least your state) on notice that you intend to do business as an LLC company and you intend to avail yourself of the laws governing LLCs in the state.
An LLC will file its articles of organization and a corporation will file its articles of incorporation. About the same information is required in both documents. The state will ask if the LLC company structure will establish a member-managed or manager-managed type company. The corporation only has “directors” so there isn’t an analogous issue to be considered in a corporate filing.
LLC Company Structure Filing Fees
The filing fees for establishing an LLC company structure and corporate structure will be basically the same, if not identical. So the cost factors won’t really enter into a decision as to whether or not you should use an LLC or a corporation.
Bylaws VS Operating Agreement
The bylaws are the guts of a corporate structure just like the operating agreement is the guts of an LLC company structure. The bylaws and operating agreement fill the same needs in each structure, but they are by no means interchangeable. One big difference you’ll find is the discussion in the operating agreement about tax choice and the involuntary transferability of ownership.
Both the bylaws and the operating agreement are unique to the company. Particularly, the operating agreement should be tailored for your needs and the way you want your LLC company structure to be “run.”
LLC Company Structure Asset Protection
The LLC can effectively give you double the asset protection of a corporation. That’s a big deal. Corporate structures are set up to protect the officers, directors and shareholders for liabilities that may occur in the corporation. They do not protect the corporation (the company) form any liabilities incurred by the stockholders.
In a large publically traded corporation, the fact that one stockholder gets into trouble and loses his or her stock is not really an issue, because one stockholder generally has no real effect on the management and operation of the corporation. However, if only one man owns the corporation (single shareholder) the corporation can easily be “lost” if the single owner “gets into trouble.”
An LLC company structure will protect the company from a member’s liabilities. The LLC can even be a “single member LLC” and the single member won’t lose control over the company in most states, even if he or she gets into trouble.
That’s a big advantage of the LLC company structure. It is important that you know about the double asset protection of an LLC.
