Perhaps you launched your Baton Rouge consulting company as a sole proprietorship a few years ago, but business is increasing, and you need to add staff.
The idea of restructuring into a limited liability company comes to mind. What are the advantages in doing so?
As opposed to a limited partnership, which only gives liability protection to limited partners, an LLC will provide liability protection to all the members of your business. While this kind of protection is similar to what a corporation provides, an LLC offers greater tax and management flexibility.
Looking at LLC advantages
The LLC format allows you more flexibility with regard to accounting methods because you do not have to use the accrual method. You also have more leeway when it comes to sharing profits. Also, unlike corporations, an LLC does not require annual shareholder or director meetings. In fact, the LLC structure does not require many of the usual corporate formalities.
Setting it up
In the state of Louisiana, you must file articles of organization and an initial report with the Louisiana Secretary of State. The filing must include the name of the LLC, the purpose for which you are forming it and whether it is a low-profile company. You must also open a separate bank account to ensure that money flows through a business rather than a personal account. Otherwise, your LLC becomes what is known as a disregarded entity and you will not enjoy all the personal asset protection you anticipated. There are several steps in registering with the state, but with legal guidance, you will avoid any errors when you establish your consulting company as an LLC in Baton Rouge.