What Does LLC Mean on a Business Header?
In 1977, the abbreviation "LLC" began to appear after the names of small businesses across the United States. Know what it stands for, why businesses use it and how it can benefit you.
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Meaning
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LLC stands for "limited liability company." You might also see it written as "Ltd. Co." or some similar abbreviation. The limited liability company is a business structure different from a sole proprietorship, partnership or corporation, though it share traits with all of them. There is no such thing as a limited liability corporation, though the term is commonly used.
Liability Protection
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As its name implies, the LLC is distinct in the way it protects business owners from liability. While a sole proprietor's personal assets are at stake when someone sues his business --- because the law doesn't consider him a separate entity from his business --- the members of an LLC only risk losing their respective shares of the company. This protection offers freedom to the entrepreneur who wants a professional-sounding business name without the hassle of incorporation.
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Popularity
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While the LLC and corporation both limit a business owner's liability, the LLC protects him from paying taxes twice for his income through the company. Members simply claim the company's earnings and losses for their individual taxes. Though this makes the LLC popular among business owners, not all states recognize this business structure. The Internal Revenue Service, also, only regards sole proprietorships, partnerships and corporations for tax purposes.
Registration
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The requirements to register a business as an LLC vary by state. In most cases, you only need to obtain the articles of organization from the secretary of state, fill out the members' contact information and return the form with the necessary fee. This fee can range from $30 to $200. In some states, it may be necessary to file an operating agreement as well, which details the organization of the LLC.
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