A limited liability company (abbreviated as LLC) is a recently developed business entity that is designed to combine some of the best aspects of a corporate business entity with other forms of business entities. Because an LLC is considered a “creature of statute” – that is, because this business form does not exist if there are no state statutes authorizing the same – it must be formed in strict compliance with the authorizing statutes.
An LLC is a very popular business form that appeals to many entrepreneurs; however, it may not be the best choice for every situation. Speak with the Memphis LLC formation attorneys of Douglass & Runger to learn more about LLCs and how they can assist you in achieving your business goals.
Benefits And Drawbacks Of An LLC
Like a corporation, an LLC provides its owners with limited liability. This means that the owners of an LLC are not responsible for the debts and liabilities incurred by the LLC – even if the LLC becomes insolvent and owes more than it is worth. This can provide new entrepreneurs with some measure of safety and security, encouraging them to take risks and be secure in the knowledge that if their business fails, they are not personally responsible for the LLC’s debts. Additionally, unlike corporations, LLCs tend to be easier to establish and require fewer formalities.
An LLC may not be right in all situations, however. An LLC may have disadvantageous tax implications. In addition, while corporations have clear-cut roles and responsibilities, roles and responsibilities in an LLC may be more unclear and resulting in confusion.
How An LLC Is Formed In Tennessee
Individuals wishing to establish an LLC in Tennessee will need to follow these steps:
In order to inform potential customers and others about the nature of the business entity, the business name must contain the term LLC or the phrase “Limited Liability Company”. Amongst other things, this informs others that the owners of the business generally cannot be held personally liable for the debts and obligations of the business.
The articles of organization include important information about the LLC, including its name, resident agent, and duration and purpose. The articles of organization may or may not be filed with an operating agreement that contains detailed information about how the LLC will be run, for example, depending on the wishes of the owner. These articles of organization are then filed with the Secretary of State along with the appropriate filing fee.
A resident agent is the person who can accept legal process and service of papers on behalf of the LLC. A person who needs to sue the LLC in Tennessee need only cause the appropriate legal papers to be served on the resident agent.
The law imposes certain tax requirements and annual reporting requirements on the owners of the LLC. Failure to comply with these requirements can result in the suspension of the LLC’s ability to operate in Tennessee.
Attorney Today Speak With An Experienced Tennessee LLC Formation Attorney Today
When embarking on a new business venture, you want to be able to focus your energies and attention on making your business work, not necessarily being mired in paperwork. At Douglass & Runger, our Memphis LLC formation lawyers can help you comply with the statutory requirements necessary to establish your LLC so that you can focus on making your business succeed.
Business Law Matters
When starting a business, consider the legal structure: partnership, LLC, or corporation. Formation services can help. Plan for business succession and legal issues such as disputes and dissolution. Understand business law and legal resources for help.
