In light of the economic times and the amount of people who are heeding the call to start their own Colorado business, the number of small or one person businesses is certainly growing. One type of Colorado business entity option for this type of business format is the Limited Liability Company (LLC) or the Single Member LLC.
The LLC combines the tax advantages of partnerships with the legal advantages of corporations, and can include the ease of the Sole Proprietorship.
- Limited Liability Company: The LLC shares with the Corporation the protection of limited liability, meaning the owner’s (members) personal assets can be protected from any action taken against the LLC. An LLC also enjoys the flexibility of the profits and losses “passing through” the business to the members, who report this information on their personal tax returns. There are documents that need to be understood and filed, including The Articles of Organization, which is the public record and forms the LLC. An Operating Agreement indicates how the LLC members will manage the business, transfer interests, withdraw members or dissolve the LLC.
- Single Member LLC: This is treated like a Sole Proprietorship for tax purposes, meaning the owner reports the business income on their personal taxes. Also, this business entity enjoys the aspect of limited liability to protect the owner from legal or financial actions taken against their business.
It is always advisable when starting a new venture to consult with an attorney with a background in Colorado business law and who understands your intentions and vision for the business. This will insure that the Operating Agreement, Colorado Articles of Organization and specific state statutes governing the business entity are completely understood by all members.
Copyright © 2011 Hasan, LLC. All rights reserved.
“Plywood Capital Letter M (Eastham, MA)” under CC license by takomabibelot
“Wet Aluminum Capital Letter L (Washington DC)” under CC license by takomabibelot
“Capital Letter C (Beltswille, MD)” under CC license by takomabibelot