Limited Liability Company
You have been running a small business without having formed a corporation or other business entity. This is known as a sole proprietorship.
Someone has suggested that you put operate your business in the form of a limited liability company (“LLC”). Should you follow their advice?
In most instances, the answer is “yes”. As its name implies, a limited liability company is intended to limit the liability of the owner if the business gets sued.
In a sense, the LLC stands between you and those who might want to file a lawsuit. The party filing a lawsuit might be able to get to the assets of the LLC but not to your individual assets.
How do I set up a proper LLC?
Although the paperwork necessary to form an LLC is not very complicated. File a Certificate of Formation with the Mississippi Secretary of State, adopt an Operating Agreement, obtain a tax ID number, and you are off and running.
Even so, you should hire an Attorney to assist you. The Attorney will not only make sure that the paperwork is prepared correctly, but he or she will also see that it is tailored to meet your specific needs.
Once your LLC is formed, you will need to follow something the law calls “corporate formalities.” This includes:
- Holding an annual meeting of the owner or owners.
- Keeping minutes.
- Adopting resolutions when proper.
- Filing annual reports with the Secretary of State.
- Holding your business out as an LLC and not a sole proprietorship.
If you believe that the formation of a limited liability company is the right move for your business, hire an Attorney who can work with you and walk you through the process. Call 601-202-1111 today and speak to one of our Attorneys or Staff. If the line is busy – Please call again.
571 Highway 51, Suite B. Ridgeland, MS 39157
Original content by: Attorney Craig Panter of Panter Law Firm