The Business Structures of Best Organizational Form (Essay Sample)

Limited Liability Company
The chosen organization for this paper is the limited liability company. This is the type of business structure that works to protect its owners from personal responsibilities for its debts and liabilities. In addition, this business structure lets one enjoy the benefits of both a partnership business and a corporation. Some of the assets that are protected by this kind of business include cars, houses and even savings accounts. All these items are protected from risk in case the company files for bankruptcy. Profits as well as losses can be moved to the owner's account without sustaining company taxes. Participants of an LLC, on the other hand, are considered self-employed and necessitates payment self-employment taxes to the medicare and social Security.
Steps to form
There are several steps that a business owner can follow come up and form a limited liability company. First, one needs to decide on a business name for the company and the name must meet the requirements of the law of the country. In addition, one should choose a name that creates an outstanding brand. Generally, state laws forbid choosing a name that is similar to another existing business (Mancuso, 2021). Another important factor to consider when choosing a business name for your company is adding the words LLC at the end of your chosen company name to denote that it is a limited liability company.
The second step is finding a designated agent for the company. LLCs require to have an agent who is registered in the state that the company is situated. A registered agent is an individual who collects official or legal papers on behalf of the limited company which include subpoenas (Bambang et al., 2022). After obtaining the papers, the registered agent will advancing them to the members of the company.
The other step is acquiring a certificate of operation from authorities. The last step of forming an LLC is the creation of a functional agreement between the members of the limited liability company that specifies all financial, legal details and management requirements. It is important to include, in the agreements, terms of distributing the profits and the rights of each member of the company. Once all that is done, the limited liability company is up and running business operations and should continue adhering to all requirements as per state laws. In most cases, the company has to file annual reports regarding financial audits and expenditure monitoring.
Taxation
Payment of taxes in a limited liability company depends on whether it is owned by one member or several members. Limited liability company owned by one person is considered a disregarded entity because it is not separate from the owner. This means that the company is taxed the same way a sole proprietorship business entity would be taxed. All the tax obligations are filed with the owner's personal income. On the other hand, a multiple-member liability company pays taxes as a partnership. The individual company members pay taxes based on their shares in the company.