Documenting the Limited Liability Company from The Entrepreneur’s Intellectual Property & Business Handbook

This article is part of a series of book excerpts from The Entrepreneur’s Intellectual Property & Business Handbook, which provides the business, strategy, and legal reference guide for start-ups and small businesses. For most small businesses, the LLC provides the best choice in terms of limiting liability, providing partnership-like tax benefits, and allowing for management provisions that are narrowly tailored to the objectives of the participants. Subchapter S corporations have the same potential tax structure as the LLC and allow for the shareholders to also be managers, but the corporate laws in most states have many provisions and requirements that business owners find difficult to follow or that are contrary to the goals of their business. Because corporate laws have changed very slowly over time, they are not as relevant or flexible as the LLC alternative.Each state has its own laws governing LLCs, and different states have different requirements regarding the minimum number of members, the types of businesses which cannot use the LLC form, public notice for formation, and other details. Because the sale of LLC interests is a form of securities sales, it will be important to consult an attorney during the business formation. Despite the variations among the states, this chapter provides a common roadmap for starting the new business venture