It is not a secret that the limited liability company structure is uniquely attractive to startup founders and aspiring business owners. Yet, it is not always easy to point to a well-known company and say, “These are examples of an LLC!” Why is this? LLC examples are significantly numerous. Yet, most businesses widely featured in popular culture references and in major publications are structured as corporations. There are solid reasons for this disparity. As a result, it is important not to let limited examples of high-profile LLCs deter you from embracing this legal structure for your new company.
Limited Liability Companies – The Basics
Limited liability company structure is attractive to new business owners and startup founders for three primary reasons. First, this structure offers a flexible management style that is far less rigid than the management structure forced on corporations. Second, LLC owners (commonly referred to as members) have flexibility when choosing a taxation model. They may opt to be taxed on their personal returns or may choose to have the company taxed separately, like corporations are. Finally, LLC structure offers personal liability protection. Sole proprietorship and partnership structures require very little reporting and feature a significantly flexible management structure. However, these models do not offer their owners any personal liability protection. That means, if creditors or legal judgments make claims against the business due to debts, regulatory infractions, etc., the courts can come after the personal assets of the business owners in question. Forming a limited liability company allows members to insulate their personal assets from business-related liabilities. It is for these reasons that LLC structure is so appealing.
In addition to the three primary reasons why LLC structure is so appealing to new business owners and startup founders, some additional benefits of limited liability structure apply to this model. Corporations are beholden to stockholders. Although corporations can be small, they must be structured in such a way that strict management and oversight requirements are met and shares of the company are issued to stockholders. This is an appealing model for companies interested in broad growth and securities-related fundraising potential. For this reason, most of the major businesses Americans are familiar with nationwide are corporations. Their model allows them to fundraise easily by issuing stock, so their potential for growth is significant. Companies like Starbucks, Apple, Walmart, Facebook, Disney, Coca-Cola and Visa are all structured as corporations.
However, forming a corporation is not usually the best option for business owners looking to maintain primary control over their company’s vision, operations and profit. Similarly, it is not a good option for most nonprofits, as forming a nonprofit that is beholden to stockholders gets tricky. For these reasons and so many others, successful business owners and startup founders still often opt to form LLCs. It is likely that if you researched many of the most successful businesses in your area that are not nationwide chains, you would discover that they are LLCs. Even a few nationwide “household names” are LLC. Some LLC examples include the Trump Organization, Dollar General, Chrysler, Anheuser-Busch and a significant subsidiary of Amazon.com, Inc.
It is important to note that the limited liability structure is available to business owners and startup founders who plan to launch their companies themselves and to those who plan to work with one or more partners. It is a dynamic, flexible model that works under numerous circumstances. When members start an LLC, they determine whether they will have a management role or whether their contribution will be only financial in nature. This flexibility allows for various groupings of individuals to work together to launch a company without any single member being forced into a role that doesn’t suit his or her needs or the needs of the company. Yes, there are far more easily cited examples of corporations than there are of LLC examples. However, this does not mean that the LLC business structure is not the best option for you and your new company. In fact, chances are that founding an LLC, unless you have very specific management or financing needs, will likely serve you and your vision best.
Legal Guidance Is Available
If you are interested in learning more about the limited liability company formation process, please schedule a consultation with a knowledgeable LawTrades attorney today. Whether you hope to found a nonprofit organization or create a profitable startup business, our highly-experienced lawyers can help. We have assisted thousands of individuals through every step of the LLC formation process. In addition to full-service LLC registration assistance, we can also help with financing strategy, employment matters, contract review, intellectual property protection and general legal services. Please schedule a risk-free consultation with one of our attorneys today in order to learn more about our knowledgeable, cost-effective, efficient approach. We look forward to speaking with you.