What Does It Mean to Be an LLC in Russia?
An LLC shape limits your liability and legally divides you from your business.
The letters “LLC” after a company name mean that the company is organized as a limited liability company rather than as a corporation, partnership, individual entrepreneur, or another business type.
An LLC has a more adaptable structure and fewer requirements than a corporation. It also offers liability protection and potential tax savings that aren’t available to sole proprietorships or partnerships.
What Strictly Does LLC Mean?
An LLC, or limited liability company, is a type of enterprise entity that a company can form by filing paperwork with the state. An LLC can have one owner (known as a “member”) or many owners.
The words “limited liability” refer to the fact that LLC members cannot be held personally responsible for business debts.
In a dispute with a business creditor, members may lose the money invested in the company but their assets aren’t at risk.
LLC members also aren’t usually liable for a co-owner’s carelessness or misconduct in business matters.
Corporations also offer this liability protection, but sole proprietorships and partnerships do not.
An LLC is governed by a written operating agreement that describes the way the business will be run, the roles of the members, and the way profits will be shared. But LLCs are very flexible in the specifics of the agreement. In contrast, corporations have a rigid structure of officers, directors, and shareholders.
Related: Do I Even Need an LLC?
What Does LLC mean in a Company’s Daily Business?
Being an LLC means you’ll need to draw a firm line between your business life and your one.
Mingling business and personal finances—or being unclear about whether you’re acting in a business or personal capacity—could cause you to lose your liability protection in a dispute. Here are some actions to take:
- Set up a business bank account and never mix business and personal funds
- Always sign business documents as an officer or member of the business
- Include the letters “LLC” after your business name on correspondence, invoices, business cards, and other documents
Creating an LLC may also mean changing the way you pay your members and handle taxes. Your LLC can be taxed in the same way as an individual entrepreneur or partnership, with self-employed owners paying their quarterly income and self-employment taxes.
But some LLCs save money by electing simple taxation. In an S corp., members can be company employees, with the company running payroll and withholding taxes for them. A business accountant can explain more and advise you on the best tax status for your business.
State law may require you to keep certain LLC records, and you may have to file an annual LLC report and pay an annual fee. Staying on top of reporting deadlines will ensure your LLC remains in good standing with the state.
Limited Liability Company Advantages and Disadvantages
Many small business owners are uncertain whether to form a business entity at all—rather than remaining a sole proprietorship or partnership—or whether an LLC or a corporation is best.
Advantages of a limited liability company over a partnership or sole proprietorship include:
- Liability protection. As long as you keep your business and personal matters separate.
- Structure. An LLC operating agreement provides a roadmap that can help avoid expensive disagreements among members.
- Potential tax savings. By electing S corporation taxation.
- Protection of your business name within your state. States don’t allow two business entities to form with the same name.
Corporations can have these same benefits, but they have a less flexible operating structure and are usually subject to more reporting requirements than LLCs.
Compared to an individual entrepreneur or partnership, the main disadvantage of a limited liability company is the expense and paperwork of setting up the business and filing annual reports. There are also potential administrative hassles in keeping a separate bank account and running payroll. If you plan to solicit outside investment, you may find that investors prefer corporations over LLCs.
How to Start an LLC
You can start an LLC in just a few simple steps.
First, you’ll need to choose a business name and select a person to serve as the registered agent to receive official documents on behalf of your business.
Then you file LLC formation paperwork with your state and pay a filing fee.
Your LLC should also have an operating agreement. You can find limited liability company examples of operating agreements online, or a lawyer or online legal service can prepare one for you.
Understanding what LLC means in business will help you decide whether an LLC is right for your company. If you’re unsure, a business lawyer can answer your questions and get your company started on the right foot.
Get help starting your business.
You may also like
What Companies Need to Understand About Payroll in Russia
Russia is not only the largest country in the world, but also one of the great and influential economies. The country’s GDP is 1.6 trillion rubles, with growth of 1.3%. These indicators speak of the power of the country’s economy. Russia is one of the leading countries in procurement of energy, metals, and rare earth resources. Lately, Russia has become the center for foreign investment. However,…
Continue Reading What Companies Need to Understand About Payroll in Russia
How to import goods to Russia
The import of goods should be understood as a process characterized by the importation into a country of goods produced in another country, for domestic consumption, the subsequent sale of the imported product, or its re-import. A company that is going to expand its interests always tries to think of an optimal scheme for importing goods to Russia, which will take into account its financial benefits and, last but not least, time…
Trouble in Paradise
Life in Shanghai has been more than comfortable for Mike Graves, the general manager of a U.S. apparel company’s 50/50 joint venture with a Chinese manufacturer. His children go to the best school, he lives in a beautiful expat neighborhood, and his company pays for a chauffeur and a nanny. Mike has made the joint…
DuPont's CEO on Executing a Complex Cross-Border Acquisition
Two days before Thanksgiving 2010, Kullman got a call from the CEO of Danisco, a Denmark-based leader in industrial biotechnology and nutritional ingredients, letting her know that his company was for sale. Danisco had been on DuPont’s M&A radar screen for several years, but now Kullman had only six weeks to make an offer. DuPont’s…
Continue Reading DuPont's CEO on Executing a Complex Cross-Border Acquisition
When to Walk Away from a Deal
A recent Bain & Company survey of 250 international executives with M&A responsibilities found that only 30% of them were satisfied with the rigor of their due diligence. And a full third admitted they hadn’t walked away from deals they had nagging doubts about. In this article, the authors, all Bain consultants, emphasize the importance…
LLC or LP: What's best for your business?
2000+ businesses Helping entrepreneurs turn ideas intobusinesses over 2000+ times in Russia. 1500+ consultations Providing access to our independentnetwork of attorneys over 1500 times. 90+ liquidations Helping companies to close down operations in the smooth way Companies (LLCs) and limited partnerships (LPs) are two of the most popular business entities. If you and at least…
Businesses to start during a recession
2000+ businesses Helping entrepreneurs turn ideas intobusinesses over 2000+ times in Russia. 1500+ consultations Providing access to our independentnetwork of attorneys over 1500 times. 90+ liquidations Helping companies to close down operations in the smooth way Starting a new business can be overwhelming, and starting a new one during a recession can feel even riskier.…
What is an EIN and how do I get one?
2000+ businesses Helping entrepreneurs turn ideas intobusinesses over 2000+ times in Russia. 1500+ consultations Providing access to our independentnetwork of attorneys over 1500 times. 90+ liquidations Helping companies to close down operations in the smooth way An employer identification number (EIN) is essentially a Social Security number for your business. Most businesses need it…
Where is my mail? Find out with instant notifications
2000+ businesses Helping entrepreneurs turn ideas intobusinesses over 2000+ times in Russia. 1500+ consultations Providing access to our independentnetwork of attorneys over 1500 times. 90+ liquidations Helping companies to close down operations in the smooth way You may not have a superpower, but with technology, it feels like you do. From apps on your phone…
Continue Reading Where is my mail? Find out with instant notifications
Related searches:
- Can a foreigner start a business in Russia
- Can an llc have two presidents
- Top 10 business in Russia
- Is it hard to start a business in Russia
- Small business in Russia
- Company formation in Russia
- Cost of doing business in Russia
- Managing member vs ceo
- OOO Russia