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Lit1 Memo

In: Business and Management

Submitted By Jswin717
Words 426
Pages 2
To: Company Owner
From:
Date: December 17, 2014
Subject: Recommending Business Type

According to the information that I have received, I have concluded that a Limited Liability Company(L.L.C.) will suit your business the best. An LLC will offer the liability protection that means so much to you, as well as offering you the best opportunity to bring in other partners for gaining capital. Profits and control would be equally divided among all the partners, according to the operating agreement and articles of organization.

Formation and Characteristics

The formation of an LLC is quite simple. Articles of organization and an operating agreement(if applicable in your state) will need to be filed with the state in which the headquarters will be located. The operating agreement will layout exactly how the control, profits, and duties will be divided. The following are characteristics that I will explain to you :

* Liability * Continuity * Income taxes * Profit retention * Control * Expansion

Liability is the key factor in choosing this type of business. All owners will only be liable for the money that they have invested into the business. This will also ensure that all personal assets are protected from lawsuits or bankruptcies. Control and profit are other key factors in making this decision. Control in the business depends on how management control was set-up in the operating agreement. Profits are divided among the owners, according to the interest invested in the company. Income taxes for an LLC are passed-through to the owners, and then each owner would file their taxes based on their share of the profits. I know that you will be looking to expand in the future. So with this type of business, you would be able to expand and grow without many obstacles. The only requirement would be making sure that the majority of the...

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