The limited liability company (LLC) is the newest form of business entity. It has enjoyed a meteoric rise in popularity among both entrepreneurs and lawyers - and for good reason. It's often a very attractive alternative to the traditional ways of doing business.
The state laws controlling how an LLC is created and the federal tax regulations controlling how an LLC is taxed are still evolving. Fortunately, the evolutionary trends are extremely favorable to small businesses. On the formation side, it's becoming simpler and simpler to set up an LLC. On the tax side, LLCs are benefitting from increased flexibility.
Once you've decided that your business should be organized as an entity that limits your personal liability for business debts, you'll have to weigh the pros and cons of forming an LLC against the pros and cons of forming a corporation. Sometimes, one or the other will clearly emerge as the better choice. Other times, the differences are more subtle-which often means that either will suit your needs equally well.
For forms to use in setting up an LLC, see Form Your Own Limited Liability Company, by Anthony Mancuso (Nolo), and Nolo's LLC Maker, an easy-to-use software program that simplifies and automates much of the work of forming an LLC.
