Business & Corporate Law

You form an LLC by filing Articles of Organization with your state's business filing office (often the Secretary of State) and paying a state filing fee, which typically ranges from about $50 to $500 depending on the state. Most states also require you to name a registered agent and may charge an annual report or franchise fee to keep the LLC in good standing.

An LLC offers liability protection with flexible, pass-through taxation and light paperwork, making it popular for small businesses. An S-corp is a tax election (available to LLCs and corporations) that can reduce self-employment tax, while a C-corp is taxed separately and is usually chosen by startups seeking outside investors. The best choice depends on your income, growth plans, and how you want to be taxed, so it's worth confirming with a CPA or attorney.

An operating agreement is an internal document that sets out how your LLC is owned and run — ownership percentages, voting, profit splits, and what happens if a member leaves. Even single-member LLCs benefit from one because it reinforces the liability shield and prevents disputes; some states require it.

"Piercing the corporate veil" is when a court holds owners personally liable for business debts, usually because the business wasn't treated as a separate entity. You reduce this risk by keeping business and personal finances separate, maintaining basic records, adequately funding the company, and following corporate formalities.

By default, a single-member LLC is taxed like a sole proprietorship and a multi-member LLC like a partnership, meaning profits "pass through" to owners' personal returns and are subject to self-employment tax. An LLC can also elect to be taxed as an S-corp or C-corp, which changes how income and payroll taxes apply.