Setting up an LLC is easy to do. The requirements vary by state, so you’ll have to check with your individual state. Generally, though, you’ll need to only fill out the LLC form and a few others, and some states require you make a contract stating what each party is responsible for, who gets what, etc. Setting up an LLC online is available in many states now, making the process even easier.
The cost of setting up an LLC varies but is generally very cheap, with the average being around five hundred dollars? You will pay something, though, whether you are setting up an LLC in CT, setting up an LLC in NJ, setting up an LLC in PA, or setting up an LLC in IN. Whatever state you set it up in, you will pay.
Why set up an llc?
LLC’s are some of the best ways to protect yourself. Entrepreneurs used corporations back in the days of the European explorers. An explorer would set up a corporation to protect himself from danger. If the ships crashed, found nothing, or had other problems, the amount at risk was confined to the individual voyage. If the entrepreneur were to put his family’s home and money at risk, he surely wouldn’t do it. Thus, the corporation was invented.
Corporations are basically another person, except that they’re not real. Legally, though, they are real. Only “his” assets can be taken if something goes wrong, not the corporation’s owner.
LLC’s are not quite corporations – they are limited liability companies. The differences lie in technical details. For all practical purposes, though, they are the same thing. They are another legal entity which can protect the owner from risk.
You would rather set up an LLC than a corporation in a lot of situations. The variables are many, but generally LLC’s are easier to set up than C or S-corporations, making them more appealing to a small time business owner or investor.
Alternatives to setting up an llc include setting up an llp, which have their advantages and disadvantages as well.
So, the primary reason you would want to set up an llc is so that you can protect your own assets. A landlord may not want his family’s money and home to be at risk from a tenant filing a lawsuit because he slipped on the landlord’s property. Also, llcs are easier to set up and maintain than the similar S-corporation, making them more appealing to a larger number of people.