Establishing an LLC means that, after chartering a set of guidelines for all partners, you can easily divide the profits among each other as you all deem fit and that each of you, personally, will be taxed for your business. There is more to an LLC than these facts, however. You probably have a few burning questions about LLCs. Read on and you'll discover answers to some of the most commonly asked ones. If you have any further questions or wish to go into the subject in more detail, it is recommended that you consult with a local and trusted business lawyer.
Do You Need To Know About Securities Before Establishing an LLC?
If you are acting as the sole proprietor of an LLC, then you won't have to worry about securities law; that is, so long as you don't accept investments from outside investors. Any outside investor who supplies you with money that you will work towards improving your LLC is treated as a security. This means that the individual who supplied the money will not actively work with the company but will expect a cut of the profits due to his or investment. Similarly, sometimes co-owners of LLCs can be considered security investors. These co-owners may not play an active role in the company, despite being legally accredited as a co-owner, and as such, may be treated by the law as a security investor.
How Many People Are Required To Form An LLC?
In every state in the country, only one individual is required to form an LLC. If a single individual is the owner of an LLC, he or she may be referred to as a "sole proprietor." However, this title is not the same as the legal title of "sole proprietor," so be careful not to confuse the two, especially if you have to represent your LLC in a court of law.
Can You Convert From A Sole Proprietorship to an LLC?
Yes, you can. Often, you will simply have to fill out a form in order to switch your business from a sole proprietorship to an LLC. Other states require that you go through the same process that you would had you otherwise simply started an LLC to begin with. Among the things that will be required of you on a conversion form are your employer identification number, your tax registration, sales tax permit, or any other licenses or permits that are relevant to your business's function.
For more information, contact Carter & West Law or a similar firm.
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